Payroll guidance

HMRC Approval

We recommend that you notify your local tax office about your Childcare Voucher scheme.

You can request a letter for your tax office from Ladybird and we will e-mail it to you or post it. We suggest that you enclose a copy of our scheme rules.

Your tax office may ask to see a copy of one of your employee’s salary sacrifice agreements and a copy of a payslip before and after they started to receive childcare vouchers. You can obtain your employees’ salary sacrifice agreements directly from Ladybird after they have ordered their vouchers.

Your Ladybird Invoices

We will email you an invoice and detailed scheme statement each month in plenty of time for your payroll processing. If your employees are paid weekly, we’ll invoice for four weeks of vouchers at a time.

Your scheme statement will show each employee’s name, payroll reference and voucher amount. We’ll highlight any new members, anyone who’s changed their voucher amount and any scheme leavers.

Ladybird account

Unless otherwise agreed, we ask for cleared payment five days before your employees’vouchers are due. If possible, we prefer you to make the payment by BACS into our bank account, quoting your scheme reference number or invoice number. If BACS payments are difficult for you then please send a cheque, made payable to Ladybird Employee Benefits Ltd, to

Ladybird Employee Benefits Ltd, 41 First Avenue, Charmandean, Worthing, West Sussex, BN14 9NJ

Amending Your Payroll

Using the information provided on your scheme statement, you need to reduce each employee’s gross pay by the amount of vouchers they are due to receive. You should not deduct the administration fee or VAT from your employees’ pay.

Childcare vouchers don’t need to be reported on your P11d forms and they shouldn’t be included in year-end payroll forms, such as your P35.

We recommend that each employee’s full pay is still displayed on the pay-slip, since this helps when they apply for a mortgage. The childcare vouchers should ideally be shown as a negative salary amount. If this is difficult for you, it is acceptable to show the vouchers as a deduction from salary.

National Minimum Wage

Under HMRC rules, it is not permissible for childcare vouchers to reduce an employee’s pay below the national minimum wage. If any of your scheme members request a voucher amount which reduces their pay below this limit, you should restrict the amount of childcare vouchers they receive. You can tell us about this restriction by phone or email.

You may also want to ensure that an employee’s voucher request doesn’t reduce their pay below the lower earnings limit. Employees earning less than this amount cease to have entitlement to some state benefits.

It is permissible for an employee to continue in the salary sacrifice scheme while on maternity leave, although it is not always in their interests to do so. Employees can sacrifice their statutory maternity pay in order to receive vouchers. If their pay is too low to cover their

vouchers, you can override their voucher order.

Employee Benefits

We recommend that you keep a record of each employee’s full pay and that you use this, where possible, for calculating employee benefits. Depending on your company’s policy, you

may wish to base the following on full pay:

• Pension scheme contributions and benefits
• Life assurance benefits
• Overtime and shift allowances
• Non-statutory maternity pay
• Pay rises and bonuses

If you do not intend to base these benefits on full pay then please let us know so that we can advise your employees accordingly.