should i cancel my chilcare vouchers while my maternity pay is calculated?

aimo

i was told by busybees that i should consider cancelling my childcare vouchers between week 17 and 25 of my pregnancy as this is when my maternity pay would be calculated. i'm not sure if i would be better off to continue with the vouchers or not? has anyone else been in this situation? thanks!

katglasgow

yes, yes yes!
If you dont your maternity pay will be calculated on what your net pay is now (ie. pay less childcare costs) so you will lose out badly. This nearly happened to me, very stressful indeed!

Nikabella

I've been trying to work this out too.

I currently claim all £243 p/m so I'm saving roughly £80 in tax p/m.

It is only the first 6 weeks which are based on your actual monthly pay though when you get 90% of your normal pay. So for example in the first 4 weeks I should get 90% of £1000 ie £900, however, as I normally pay for the CCV I only get £757 for 4 weeks so at 90% I would get £681. Therefore I would loose out on £220, however, from what I have read I understood that your SMP was based on 26 weeks of previous wages? Therefore I would have to cancel the CCV 6 months earlier and this would mean my childcare would cost me an extra 6 x £80 = £480.

Over the full 6 weeks 90% pay I would stand to loose roughly £330 but it would cost me £480 not to loose this. Have I got this completely wrong

The other 33 weeks are SMP at £123 p/w which aren't affected by the CCV though as long as you earn more than £90 p/w with your vouchers?!?

A.x

aimo

thankyou for your replies but think i may now be more confused than ever!? i currently pay 175 per month in ccv and i think i get 3 months full pay for my maternity leave. can anyone help me work out what my best option is?!

Rockporkchop

If you pay £175 in ccv a month then that means your annual salary is reduced by £2,100 a year.

If you continue with the ccvs from weeks 17-25 (which is when your maternity pay is calculated) then your 3 months' full pay maternity leave will be reduced by £175 x 3 = £525.

I would do as they suggest (which was very kind of them) as the extra £525 maternity pay is much more than the £117 (or £154 if you are higher rate taxpayer) you will be saving in tax by buying ccvs for weeks 17-25.

Woby_Tide

You may want to check whether your employer actually calculates against a reference salary rather than your 'sacrifice' salary level. I.e some employers still take into account the Child care voucher amount for calculation purposes and still include it as being part of your base salary

ab7167

I also would check if it is your Contracted salary that your SMP is based on - I am pg with my second child and have been advised by the company that they calculate on my contracted salary, with CV disregarded for this purpose.

It is the same thing that my pension contributions are based on my whole salary, disregarding CV deductions. A call to your HR should sort this out.

Hope you enjoy being pregnant!

Alex

cclarke12

Other thing worth checking is what they do about vouchers whilst you are getting maternity pay. Whilst I am on enhanced maternity pay for work I am still purchasing my vouchers via salary as normal. However, when I go onto SMP only my employer is providing the childcare vouchers and BUPA cover which I currently pay for, free of charge. It was a bit complicated but they were obliged to do this because of some legislation which states that I cannot lose my employee benefits whilst off work (or something like that). I am sorry I don't know all the details and it may well be because we have a flexible benefits scheme. However, it has worked out really well as for 2-3 months I will be getting vouchers from my employer but not having to pay for it.

aimo

i have spoken to my hr department who have siad that maternity pay is based on gross wages not net - so i shouldn't need to cancel! thanjks guys!

Rockporkchop

What you need to ask the HR department is do they base your maternity pay on your reference salary or on your sacrifice salary (eg your normal salary minus the £2100 deduction for ccvs). If they say they base your maternity pay on your reference salary then you don't have to cancel the vouchers. If they say they base your maternity pay on your sacrifice salary then you need to cancel the ccvs from weeks 17-25.

Ama

Woby_Tide wrote: »

You may want to check whether your employer actually calculates against a reference salary rather than your 'sacrifice' salary level. I.e some employers still take into account the Child care voucher amount for calculation purposes and still include it as being part of your base salary

If you enter in a salary sacrifice agreement then your maternity pay MUST be calculated using the reduced salary. These are HMRC rules.