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Post Info TOPIC: child care vouchers/payroll query
lor


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child care vouchers/payroll query


I have a client who is the director of a Limited company and I am much in need of some help with regards to how to deal with SMP & childcare vouchers (salary sacrifice) does anyone know how I enter the SMP & childcare vouchers into the accounts (Sage One) and also through Payroll (Moneysoft). The director is currently paid 641 per month (to keep under the 13/14 tax free threshold) so there are no NI (Employees or Employers) or PAYE deducted. This is shown on the payslip as total gross pay 884, deduction childcare vouchers of 243, to give the net pay of 641.
The director is due to go on maternity leave in September, does anyone know how I show/enter the monthly SMP of 131.37 through payroll and the bookkeeping/accounting side also? I know I can not deduct the childcare vouchers from the SMP (and obviously there would be a shortfall if I did do this).
Do I include an entry in the payroll to cover the childcare vouchers amount? i.e. Gross Salary 243, less childcare vouchers 243 plus SMP 131.37 so the net pay is 131.37? Can the director be paid while they are on maternity leave if so, is this tax efficient?
Or as the childcare vouchers are currently paid through the company, should they be paid by the directors personal bank account while she is on maternity leave? She would ideally like to continue to take advantage of the tax free (NI or PAYE) threshold while on maternity leave.
I have read lots on the internet including HMRC but can not find the answer to this anywhere -
I would be most grateful of any advice anyone can offer on this!


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Hi Lor,

As the scheme is a salary sacrifice one, there can be no need to add the �243 Childcare to the usual salary of �641, but to deduct it, giving �398.

You should probably point out to her that salary would make her ineligible for any future SMP whilst the Voucher scheme is in place.

The SMP is calculated by going to the Calendar - Settings and entering the expected DOB and leave dates etc. I also notice that there is a Childcare function under the Deductions tab and you can set the assessment bands with the blue spanner.

I had much more typed but the browser is being unco-operative today and I lost it all.

Not a Sage user but you'd process the �398 salary in the usual way and be able to create and process the Voucher cost under a salary sub-code.

Hope that's a little helpful for starters.

Regards,
Tim

PS Remebered a bit more of my lost posting - you'd need to apply direct to HMRC for SMP funding as there are no tax/ni deductions for setting off.


 

 



-- Edited by Don Tax on Saturday 18th of May 2013 09:54:11 AM

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Hi Tim,

I've had issues with the browser in the past. If the issue was that you attempted to post and you got something like a timeout so the post was not made the box where you enter the reply is cleared... However, if you hit the back button it should be able to retrieve the unsent message from memory.

At that point I generally copy and paste the message into word just in case (and wince at the number of red underlines of my spelling) and reattempt the post.

It might not cover the issue that you had with your post but hope that this helps for any future issues.

kind regards,

Shaun.

p.s. really informative post by the way. I really must read more around that area as it's one of those areas of knowledge weakness that I have that I tend to avoid rather than get stuck into.

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Ahhh thanks Shaun.

The browser was so unstable that I decided against the back button and to just type as much as I could quickly remember before closing the thing down. I did have some notes trawled from the net including one from accounting web when the scheme was announced, but I didn't have the actual posting copied. Had been meaning to have a go at Lor's question for a couple of days as I hadn't researched it since - gee whizz - it looks like 2005.

Kind of hoping that some kindly soul chips in who has actually dealt with it. One thing, it might be worth Lor considering using a Voucher Company first time, but then the client would no doubt squelch that idea, Monty Python Wellington style.

Lor, as to whether it is tax efficient. They'll get 100% SMP funding plus the bit of compensation, so yes, and they can continue to pay 641, the remainder after SMP being normal salary. I think you'd do this using the Net To Gross Target button on the main Pay Details Menu.

Have a good weekend both.

Tim

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lor wrote:
I have a client who is the director of a Limited company and I am much in need of some help with regards to how to deal with SMP & childcare vouchers (salary sacrifice) does anyone know how I enter the SMP & childcare vouchers into the accounts (Sage One) and also through Payroll (Moneysoft). The director is currently paid 641 per month (to keep under the 13/14 tax free threshold) so there are no NI (Employees or Employers) or PAYE deducted. This is shown on the payslip as total gross pay 884, deduction childcare vouchers of 243, to give the net pay of 641.
The director is due to go on maternity leave in September, does anyone know how I show/enter the monthly SMP of 131.37 through payroll and the bookkeeping/accounting side also? I know I can not deduct the childcare vouchers from the SMP (and obviously there would be a shortfall if I did do this).
Do I include an entry in the payroll to cover the childcare vouchers amount? i.e. Gross Salary 243, less childcare vouchers 243 plus SMP 131.37 so the net pay is 131.37? Can the director be paid while they are on maternity leave if so, is this tax efficient?
Or as the childcare vouchers are currently paid through the company, should they be paid by the directors personal bank account while she is on maternity leave? She would ideally like to continue to take advantage of the tax free (NI or PAYE) threshold while on maternity leave.
HAVE YOU TRIED PLAYING WITH THIS...
I have read lots on the internet including HMRC but can not find the answer to this anywhere -
I would be most grateful of any advice anyone can offer on this!
I HAVE AN EXPERT AT MY DISPOSAL BUT CANT ASK ANY QUESTIONS FOR YOU, UNTIL MONDAY. SO I WILL POP BACK AND SEE WHETHER ANYONE HAS ANSWERED THE QUESTION

Sorry for the capitals!



-- Edited by FoxAccountancyServices on Saturday 18th of May 2013 11:11:26 AM

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Michelle, Fox Accountancy Services

Thoughts are my own and not to be regarded as official advice

www.foxaccountancyservices.co.uk @FoxAccounts

BKN WINNER - Most Innovative Accounting Firm 2013



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Don Tax wrote:

Hi Lor,

As the scheme is a salary sacrifice one, there can be no need to add the �243 Childcare to the usual salary of �641, but to deduct it, giving �398.

You should probably point out to her that salary would make her ineligible for any future SMP whilst the Voucher scheme is in place.

The SMP is calculated by going to the Calendar - Settings and entering the expected DOB and leave dates etc. I also notice that there is a Childcare function under the Deductions tab and you can set the assessment bands with the blue spanner.

I had much more typed but the browser is being unco-operative today and I lost it all.

Not a Sage user but you'd process the �398 salary in the usual way and be able to create and process the Voucher cost under a salary sub-code.

Hope that's a little helpful for starters.

Regards,
Tim

PS Remebered a bit more of my lost posting - you'd need to apply direct to HMRC for SMP funding as there are no tax/ni deductions for setting off.


 

 



-- Edited by Don Tax on Saturday 18th of May 2013 09:54:11 AM


Hey Tim :)

If the Director doesn't start to get taxed until after the deduction, would it be better to start with a gross wage of 884?? (Sorry, not a payroll bod, so not a challenging question, but an inquisitive one)

Did you go for the interview??



-- Edited by FoxAccountancyServices on Saturday 18th of May 2013 12:19:49 PM

__________________

Michelle, Fox Accountancy Services

Thoughts are my own and not to be regarded as official advice

www.foxaccountancyservices.co.uk @FoxAccounts

BKN WINNER - Most Innovative Accounting Firm 2013



Senior Member

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Date:

We had a client continue with childcare salary sacrifice while being paid SMP on maternity leave. (we know this because they asked how to enter it in 12Pay)

We queried if this was allowed, and they said that they'd researched the rules thoroughly and couldn't find anything forbidding it.

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Life's a reach, then you gybe



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And as if by magic, a kindly soul appears.

One other thing which you may have seen Lor is that this can affect Tax Credit entitlement so thats one proviso on whether the whole scheme would be tax efficient.

https://www.gov.uk/childcare-vouchers-better-off-calculator

The other thing is that the whole scheme is changing so Michelle's expert might be invaluable.

http://www.guardian.co.uk/money/2013/mar/30/childcare-vouchers-how-work

Regards,
Tim

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FoxAccountancyServices wrote:
Don Tax wrote:

Hi Lor,

As the scheme is a salary sacrifice one, there can be no need to add the �243 Childcare to the usual salary of �641, but to deduct it, giving �398.

You should probably point out to her that salary would make her ineligible for any future SMP whilst the Voucher scheme is in place.

The SMP is calculated by going to the Calendar - Settings and entering the expected DOB and leave dates etc. I also notice that there is a Childcare function under the Deductions tab and you can set the assessment bands with the blue spanner.

I had much more typed but the browser is being unco-operative today and I lost it all.

Not a Sage user but you'd process the �398 salary in the usual way and be able to create and process the Voucher cost under a salary sub-code.

Hope that's a little helpful for starters.

Regards,
Tim

PS Remebered a bit more of my lost posting - you'd need to apply direct to HMRC for SMP funding as there are no tax/ni deductions for setting off.


 

 



-- Edited by Don Tax on Saturday 18th of May 2013 09:54:11 AM


Hey Tim :)

If the Director doesn't start to get taxed until after the deduction, would it be better to start with a gross wage of 884?? (Sorry, not a payroll bod, so not a challenging question, but an inquisitive one)



Yes, almost certainly.



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Life's a reach, then you gybe



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Hi Michelle, it just struck me that if the 243 were to be added, then common sense tells me that it would not then be a salary sacrifice. Didn't get the job unfortunately but you just have to keep whistling 'Keep Right On To The End Of The Road'

http://www.youtube.com/watch?v=go6PFNhLzr8

"If you're tired and weary, still journey on, till you come to your happy abode" lol


Hi Tom, I was pointing out (more clearly in the original draft) that a 398 salary going forward would be below the LEL for SMP entitlement.

That's two kindly souls.

Cheers peeps.

Tim



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Don Tax wrote:

Hi Michelle, it just struck me that if the 243 were to be added, then common sense tells me that it would not then be a salary sacrifice.


So would it be practical for Directors planning to use child care vouchers, to increase their wage to, let say, use their full PA rather than stay under the threshold, as soon as is possible, before they start, in order to get full advantage of the situation, whilst also making it look bonafide??

Sorry to hear about the interview - clearly they just werent ready for your wealth of knowledge and amazingness :)



-- Edited by FoxAccountancyServices on Saturday 18th of May 2013 12:00:18 PM

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Michelle, Fox Accountancy Services

Thoughts are my own and not to be regarded as official advice

www.foxaccountancyservices.co.uk @FoxAccounts

BKN WINNER - Most Innovative Accounting Firm 2013



Expert

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Practical? Yes. Commonplace? No doubt. Lor may already have had increasing the wage in mind.

I'm wondering how legal that would be tbh.

Clearly, I'll just have to take my Harry Lauder songs elsewhere lol




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LOL.. That was an oldie!

I would imagine that if done properly, it couldn't be proved that the increase was simply to be tax efficient.. if it was done say a year before, or business activity had increased around the same time. I have a sole trader who has a toddler. I am contemplating incorporating her. This post has got me thinking about whether it would be worth setting her up with a higher wage from the beginning, and putting her on a scheme like this?

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Michelle, Fox Accountancy Services

Thoughts are my own and not to be regarded as official advice

www.foxaccountancyservices.co.uk @FoxAccounts

BKN WINNER - Most Innovative Accounting Firm 2013

lor


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thank you for your replies

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