"Ed Balls' reply to my Childcare agitation. Suggestions needed." blog discussion

Peteront

Its great that this has been brought up and made public. My wife and I signed up for Vouchers because of the monthly savings, we were NOT told we had to tell HMRC and as a result find ourselves £2500 overpaid.

The form you complete each year do not give you ANY ability to let HMRC know HOW you pay for your childcare. There is one box that says "How much per week does your childcare cost?" well it costs me £100 a week so thats what I put in. There should be a box that says "how much in vouchers do you pay" or something similar.

HMRC are the most unprofessional government agency going, the training for taxcredit advisors is 3 weeks reading a computer screen, I know coz I used to work for HMRC!

We have found ourselves overpaid in the past because HMRC are incapable of asking even the most basic questions and rely on a get out clause that reads "Its the tax payers responsibilty to provide all necessary informaion". What informatin they need is anyone's guess though!

So - well done Martin - I hope you get somewhere with this.

And if anyone has dealings with HMRC, please please NOTE the date, Time and person you spoke to when you ring and ask THEM if they need any other information from you.

Peter

l33tsp33k

Fundamentally, the whole tax credit system is a disaster. However getting that changed may be beyond even Martin's abilities until there is a change of government.

I have had an aboslute nightmare trying to help my sister work out her tax credit entitlements. I now have this image when I have to call them of dealing with the "Computer Says No" person from Little Britain - this isn't the fault of the people who work there, just that the system is so labarynthyne and complicated that all they can do is punch some numbers from filling in yet another tedious form into their computer, pull the lever, and see what magic number pops out of the computer several days later. Asking questions like "what about this?" and "what's the effect of that?" are met with incomprehension as they have no idea how this hideously complex system works.

And let's not forget that some people end up with marginal tax rates of 90% thanks to tax credits...

Mike

clareybear

Martin - A friend told me about a scheme called the TEDS scheme which in a nutshell allows you to sacrifice your salary (should not be done lightly, pensions, bonuses etc I know) in order to get your childcare costs pre tax. Great I thought as nursery bills will soon be in the region of £1800 a month for me. The problem is each nursery has to sign up to this scheme at £300 per person and each company needs to sign up at £700 per person. I did the maths and it would still work out at a saving on the tax and NI front for my employer and even if I offered to pay the £700 I would STILL make a saving, but sadly they won't go for it. I am now trying to work out if it is feasible for me to go back to work - can't afford to work, can’t afford not to.
In short can the Gov't come up with some way to let you pay for the FULL childcare amount PRE TAX?

Thanks for taking this up Martin - could you try and push it another step?

I also think we need to be careful about how things are worded as I am just about to go back to work (probably) I was horrified to read "palming your kids off onto other people". Every one has a choice and all choices should be respected.

savingup_2

I would also like to know why you can't use childcare vouchers to pay for things like school dinners. When they're used for breakfast / holiday clubs. nursery etc then the cost of meals is included and so in effect childcare vouchers are being used so why not for school dinners. This may increase the take up for school meals in addition to helping parents out.

Lynb_2

I too campaigned at my co to introduce Childcare vouchers - after approx 3 years they have introduced it - the CV Provider do mention tax credits in their employee info material and the 'up to' max saving.
But the parents using it do not get the full cash saving because the company calculate pension contributions on the 'new' reduced salary so that can be up to a 10% loss of the gain!!! The higher tax payers do gain the most anyhow leaving the 20% payers straggling behind - those that are most likely to benefit more from the tax credits if both parents work.
The company save a whopping 12.8% employers NI contributions on the difference between the old salary and the new sacrificed salary and the commission to the provider is only 2.5% - I think the employer is in a win/win situation here and being greedy - the employee is losing out on their own and employer pension contributions if they pay a % of pay into the DC scheme. This makes the comparison is even more confusing for the employee as they were not told the full story on implementation of the scheme. The employer left it all up to the CV provider. I do not have young children so was hoping his would be more of a benefit for the parents than the employer.

WASHER

micky_101 wrote: »

As a full time student who's partner works full time, I need childcare but am not entitled to any help with the costs. The help avaialable to students needs seriously looking at. I am entitled to a full maintenance grant to help with basic living costs whilst I'm a student, so clearly student finance recognises that the family has a low income, however tax credits take no account of one parent being a student - both have to be working a minimum of 16 hours top qualify for help with childcare. Sadly if the cost of childcare becomes too difficult to manage I may have to give up my course and then be stuck at home as an unemployed person .

This doesn't only apply to students, I am currently a very frustrated stay at home mum whose husband works and therefore claim no benefits other than child allowance and the basic of £5.45 tax credits, I have two children and I had to give up work a few years ago as it didn't pay for me to work. The government will only pay child care after approx £100 per week, (they average the childcare out over 52 weeks apparently) I didn't even earn that, so in the holidays and there are 13 weeks of school holidays per year, I paid to go to work and was seriously out of pocket. I paid £88 per week for my two children to go to breakfast and after school club but was told I wasn't entitled to anything, the government needs to look at this system, how can it be that I am better off in the long term being at home and not contributing to National Insurance or the tax system (I have made sure I'm ok to claim for state pension as claiming child benefit entitles you to it under the home responsibilities clause.

Saving up -

I would also like to know why you can't use childcare vouchers to pay for things like school dinners. When they're used for breakfast / holiday clubs. nursery etc then the cost of meals is included and so in effect childcare vouchers are being used so why not for school dinners. This may increase the take up for school meals in addition to helping parents out.

Don't get me started on this one, school meals, I simply cannot afford to pay for my two children to stay for school lunch, its £1.95 each per day, that is £78 per month, the old stylers can feed a family of 6 on that for two weeks, I think the majority of school lunchers are parents on benefits (I'm not judging anyone btw), it seems again those who just fall out of the bracket of any help get nothing and are worse off than some of those receiving benefits, I know we are as a family in comparison to my sister who is on benefits and has two children.


Good look Martin, the government need a wake up call on this issue and many others.

Debbies26

I thought that tax credits took your full earnings into account otherwise why do they ask for them?

J76

Hello Martin,

I'm with Debbie on this one as I have no idea as to how the calculations are reached and how the formula works. I do think the process of application is relatively straightforward - it's a nuisance to dig out all your paperwork and P60s - but I can see it's necessary to provide all this info.

My husband and I both work in the public sector and we take part in a salary sacrifice scheme. Is this the same as childcare vouchers? We pay by 'e-vouchers' if it is.

I agree with some other posters that childcare voucher providers (mine is Sodhexo and I have no complaints with them whatsoever) aren't really in a position to provide accurate advice on tax credits. Surely this should come from the relevant Government department?

Jo

stbhawk

WelshGandalf wrote: »

How about money for childcare costs if there are 2 parents and one of them stays at home to look after the kids?!

I completely agree. My partner and I took the decision to both work part-time and share the childcare of our little boy, so we could both spend time with him and because childcare is just so expensive in this country. A few years on and after having another child, I am now back working part-time. My partner was working full-time, but has been made redundant, and has been told he can't claim job seekers allowance because he hasn't made enough national insurance contributions because he was working part-time.
So getting some money for saying home to look after your kids would be a welcome change.

tillys

Unison warned us that a scheme to pay for bikes to cycle to work reduced your pension!!!! Does this apply to the Child Care Tax Voucher too - ie that by reducing gross salary by £1000 reduces the amount used to calculate pension?