18 March 2011

Nursery Fees & Cycle to Work

Nursery Fees

I have mentioned on several occasions that a limited company can contract directly with a nursery and pay fees up to £55 per week which are tax deductible to the company and not taxable on the employee / director.

It is essential that not only does the company pay but also the contract is between the company and the nursery or registered child minder.

There are changes to the rules with effect from 5th April 2011 where the employee / director is a higher rate taxpayer. These changes do not impact where the employee joins the scheme prior to 5th April 2011 and it may be appropriate to take action now.

Such schemes have mainly been used for the children of one person or family companies although please be aware they may be appropriate for any employee in conjunction with salary sacrifice and we have operated salary sacrifice nursery schemes in this office.

Cycle to Work

Salary sacrifice can also be used in conjunction with the provision of a bicycle (not motorised) with a value up to £1,000 although one condition is that the bicycle should be used at least 50% of the time for cycling to work.

Please let me know if you require further information.

Ian Stewart FCA CTA
Stewart Associates Shrewsbury Ltd
Chartered Accountants and Business Advisors