Childcare Costs discussion

susantvw

Will I be doing something wrong.

I've recently returned to work from mat leave. I can claim 70% nursery fees. My nursery fees will be taken directly from my wage as its a work nursery. I have been told that the 30% difference can be deducted from my wage before tax and national insurance is taken off so ineffect its like salary sacrifice but not vouchers.

My work told me this is allowed and its a loophole. I work for a big organisation and they have done the tax credits training.

Thanks for any advice

s

rpc

You are in a very small corner of tax legislation, I am not sure anyone but HMRC can tell you for certain and even then it may depend who you speak to!

Workplace nurseries can be paid for by salary sacrifice - this is in place to encourage employers to set them up.

To avoid abuse, there are strict requirements defining a "workplace nursery." If your nursery meets these requirements then think yourself lucky.

However, salary sacrifice for childcare is normally considered by HMRC to reduce the cost of your childcare so I am not clear at all that what is proposed is OK. Paying for a place by salary sacrifice is fine, but I don't think you maintain your full entitlement to tax credits.

Probably best to call HMRC and ask. You (personally) could face a big tax bill if your employer has got it wrong.

natalie66

Hi

My husband was unemployed for a portion of this year and I began reclaiming tax credits last month as our income had dropped. My husband is now back in work and I have estimated our yearly income as 27300 which I have informed the tax credits office of. We both work over 30 hrs a week currently. I have received a letter stating that we are now entitled to nothing. I know that the cut off is 26000 so I assumed this is right. My daughter does now go to nursery and I thought we may be eligible for some payments towards this considering our income for the year is so low. I am assuming because our current childcare costs are low (£39 a week, 52 weeks a year) that is why we do not receive anything towards it.
However, I cannot find any guidelines on the internet as to how much we need to pay to start receiving help towards costs. This would be helpful as I am considering increasing my daughters nursery attendance in the future. Also we have a second child due and it would help me to calculate overall costs when I go back to work after my next maternity leave.
When I enter the exact same information that I gave the tax credit office onto their own calculator (and some others) I have been advised I should be receiving some child tax credit so these are not accurate.

Thankyou

Fliss_M

having used the "do i qualify" HMRC calculator on line, it seems even at 39p/w your entitled to something. It usually drops by £1 for every £10 earned over the 26K limit. Or something like that. Possibly call the helpline and ask why their calculator says your entitled but your getting nothing. It may have something to do with what your listed earnings for last year were

rpc

I would expect you to be entitled along the lines of this table:

http://www.hmrc.gov.uk/taxcredits/people-advise-others/entitlement-tables/work-and-child/work-pay-childcare.htm

Withdrawal rate for tax credits is 42p/£

I reckon should should still get a bit (£800 a year ish).

natalie66

The HMRC calculator estimates me at around 15pw which as you say would be £800 annually approx. I have checked my entitlement letter and they have the correct figures. I will try and give them a call. Is there a way to work them out manually?

Thankyou

rpc

natalie66 wrote: »

Is there a way to work them out manually?

It involves standing on your head and looking in a mirror while doing the calculations with a pencil held between your toes.

"Tax doesn't have to be taxing", but tax credits are a different story!

natalie66

Lol. It's a pain really. I guess if I ring them they are just going to say the online calculator is wrong. Would prefer to be able to work it our myself and definitely know. Ah well its not like it is a huge amount of money.

ryantravs84

Are these fees even legal. It seems very unreasonable for the consumer. You don't appear to have a choice whether you risk losing your nursery place or not. Can anyone shed some light on this.
Ryan

Savvy_Sue

ryantravs84 wrote: »

Are these fees even legal. It seems very unreasonable for the consumer. You don't appear to have a choice whether you risk losing your nursery place or not. Can anyone shed some light on this.

This might be better as a separate question, but meanwhile, if the nursery is open during school holidays and you choose not to send your child, why would a retention fee not be lawful? They can't fill the place if you want it back at the end of the holidays, can they?

Also staff have to be paid throughout the year, whether or not your child is there.

The alternative is NOT to charge a retention fee and put up fees all year: childcare settings rarely (if ever) make much profit.