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Tax Relief on Childcare

Many of you may have read about the tax breaks that the Government introduced to assist with "approved" childcare, which includes nannies.

There are basically two types of relief that are available.

Firstly, for families with an income of up to £58,175 (or £66,350 if there is a child under 1), childcare tax credit is available to assist with the cost of using an "approved" nanny as part of working tax credits. For further information on whether you qualify you can visit www.taxcredits.inlandrevenue.gov.uk

Secondly if your employer gives you childcare vouchers, the first £55 per week per employee is now exempt from tax and national insurance (and employer's national insurance) provided registered or approved childcare is used. If both parents receive childcare vouchers they are each entitled to receive £55 per week free of tax and national insurance. For a basic rate tax payer the tax and national insurance savings on £55 per week amount to £17.05 per week and for a higher rate tax payer the relief amounts to £22.55 per week. Childcare voucher schemes can be used as part of a salary sacrifice scheme or given as an addition to salary.

A childcare voucher scheme can be set up quite easily by your employer but there are various criteria including the scheme being available to all employees. The Human Resources Department should have further details.
If you are a director of your own limited company and would be interested in setting up a childcare voucher scheme, Taxing Nannies would be happy to assist you.

How to get your nanny approved?

If you decide you would like your nanny to be approved this is done by voluntary registration to the Ofsted Childcare Register. Your nanny can apply online on www.ofsted.gov.uk or by telephone on 08456 404040, or you can ask for a form for her to complete in writing. Ofsted will write to you to let your nanny know that they have received the application. The letter will include details on how to:

obtain an enhanced CRB disclosure, unless Ofsted already hold a disclosure carried out within the past three years
arrange a check of your nanny's identity, the first aid qualification and any other information they need at a local post office
pay the non-refundable application fee of £100
provide any further information they need to decide on suitability of your nanny to provide childcare

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Tax Relief on Childcare

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