Childcare Vouchers and tax implications

wanna-be-mortgage-free_2

Any advice/help would be appreciated.

I work part-time and started getting childcare vouchers a number of years ago after my employer told me about the NIC benefits but am unsure what on earth is going on with my tax code as a result.

For this tax year details as follows:

Personal allowance - 5035
Benefits in kind - 2652 (which is the total of my yearly childcare vouchers)
Medical insurance payments - 204 (which I know about and agree with)
Tax underpaid £815.56 - 3707 (for previous tax year)

Are childcare vouchers classed as a benefit in kind? Surely what I've save on NIC I've had to pay back in tax?

Also to make matters worse/more complicated I have been overpaid from February 05 until March 06 and am having to pay back 50% of the overpayment (after awful negotiations with my employer as it was totally their fault!) so what bearing does that have on my tax?

I would so much welcome help and advice as am totally ignorant with tax matters. I've been putting this off for weeks but really need to sort out.
Ta

fannyadams

I think your employer has got it wrong - childcare vouchers are SALARY SACRIFICE not benefits in kind.
go to https://www.hmrc.co.uk and find out.
alternatively ring your tax office and get them to check your tax code.

wanna-be-mortgage-free_2

fannyadams wrote:

I think your employer has got it wrong - childcare vouchers are SALARY SACRIFICE not benefits in kind.
go to https://www.hmrc.co.uk and find out.
alternatively ring your tax office and get them to check your tax code.

Oh thank you, I knew it couldn't be a benefit in kind. Will phone first thing Tuesday.

CIS

Salary sacrifice information here
http://www.hmrc.gov.uk/specialist/salary_sacrifice.pdf

wanna-be-mortgage-free_2

Thanks for this.

Been looking over my previous payslips, I have been already taxed on the childcare vouchers through payroll so now the IR want to tax me again :eek:

Also, the underpaid tax, I have worked out it comes from the previous tax year childcare vouchers. Will most certainly be giving them a ring Tuesday.

Thanks for all the help. Very much appreciated.

Spendless

wanna-be-mortgage-free wrote:

Thanks for this.

Been looking over my previous payslips, I have been already taxed on the childcare vouchers through payroll so now the IR want to tax me again :eek:

Also, the underpaid tax, I have worked out it comes from the previous tax year childcare vouchers. Will most certainly be giving them a ring Tuesday.

Thanks for all the help. Very much appreciated.

Don't really understand that. Childcare vouchers are tax and NI free for upto £55 per week (was £50 per week till last budget).

sarahlouise210

Not all employers operate the scheme as a salary sacrifice - some employers(usually small employers) will buy the childcare for the employee (or provide vouchers for a certain childcare provider)and give the childcare as a benefit in kind. In this case the first £55 would be tax and NI free and anything over and above £55 per week would be a benefit in kind and would be included as such on a P11D (statement of taxable benefits) at the end of the year. Unless the Tax office had been informed during the year then no coding deduction would have been made, therefore it is possible that an underpayment of tax could be correct.