Question about Child Tax Credits and Childcare Vouchers

sweetdaisy

Hi

As of today my Child Tax Credits have been reduced from £228.51 every 4 weeks to £42.18 every 4 weeks. Out little Boy is almost 2 years old and we pay £68.00 a week for 2 full days in Nursery (he spends the other 2 days a week with my parents and one with my In Laws).

Both Hubby and I work full time and our household income is just under £40,000 a year. I used to receive £228.51 every 4 weeks Tax Credits as it was worked out on my 2008-2009 salary where I took 9 months Maternity Leave.

My employers offer Childcare vouchers, as part of a salary sacrifie scheme up to the sum of £243 a month, so according to the Computer Share Voucher website this is a Tax and NIC annual saving of £186 a year.

Can I still claim Childcare vouchers an still receive the £42.18 (4 weekly)Family Element of Child Tax Credit or will the CTAX stop if I claim vouchers?

Also, our son will be starting a Welsh School Nursery in September and this will cost another £30 a week, just wondering if school nursery's take ChildCare Vouchers?

Sorry if this doesn't make sense.

mitchaa

Incorrect.

You can sacrifice £243pm from your gross salary and the reduction in your take home pay as a basic rate taxpayer (as you are) is £167.

This means you get a £243 voucher having only paid £167 for it. This saves you £76pm and over the year £912.

You will still receive the CTC family element (£42) regardless if you take the vouchers ot not

sweetdaisy

mitchaa wrote: »

Incorrect.

You can sacrifice £243pm from your gross salary and the reduction in your take home pay as a basic rate taxpayer (as you are) is £167.

This means you get a £243 voucher having only paid £167 for it. This saves you £76pm and over the year £912.

You will still receive the CTC family element (£42) regardless if you take the vouchers ot not

Thanks for this. Saving £76 a month seems good . Just wondering would I still get Child Tax Credits of £42.18 (4 weekly) as well as Childcare Vouchers or will this stop ?

mitchaa

You can do the maths yourself.

You pay tax at 20% and NI at 11% so 31% altogether. You will save this 31% on the £243 portion of your salary sacrifice.

£243 x 0.69 = £167.67 (Cost to you in NET)

mitchaa

sweetdaisy wrote: »

Thanks for this. Saving £76 a month seems good . Just wondering would I still get Child Tax Credits of £42.18 (4 weekly) as well as Childcare Vouchers or will this stop ?

Yes, 110%:j

mitchaa

It's definitely worthwhile and further savings can be made if your partner can get his employer to implement the voucher scheme aswell.

£486 worth of vouchers for £335 at a maximum if your costs were that high. However, your costs will be £98pw/£424pm (£5096pa / 12)

You can salary sacrifice £243 (£167) and your partner £181 (£125) to make up the £424.

£424 worth of vouchers for £292. A saving of £132

Not bad.

sweetdaisy

mitchaa wrote: »

It's definitely worthwhile and further savings can be made if your partner can get his employer to implement the voucher scheme aswell.

£486 worth of vouchers for £335.

Thanks for the advice. I am not sure if my Husband's employers will do this as his place of work is closing down and my Husband is being made redundant in September .

woohoo

Hi,

I get the basic CTC of £42 or whatever it is a month. I have started claiming vouchers for childcare but haven't told CTC department yet (oversight!!) as I haven't got any child care costs on my award info anyway (didn't have any costs before). Do I need to bother as I don't think it makes any difference to what I get? Would I have to send information in, or just tell them?

Thanks

sweetdaisy

woohoo wrote: »

Hi,

I get the basic CTC of £42 or whatever it is a month. I have started claiming vouchers for childcare but haven't told CTC department yet (oversight!!) as I haven't got any child care costs on my award info anyway (didn't have any costs before). Do I need to bother as I don't think it makes any difference to what I get? Would I have to send information in, or just tell them?

Thanks

I spoke to my employers today and have applied for childcare vouchers. I don't think it makes a difference to CTC as we both don't have any help towards childcare costs from them, so I am assuming that we still get the £42 ever 4 weeks plus childcare vouchers.

Just waiting to see if other people reply to this post, so that I can get the situation clarified.

redtraveller

mitchaa wrote: »

Incorrect.

You can sacrifice £243pm from your gross salary and the reduction in your take home pay as a basic rate taxpayer (as you are) is £167.

This means you get a £243 voucher having only paid £167 for it. This saves you £76pm and over the year £912.

You will still receive the CTC family element (£42) regardless if you take the vouchers ot not

Sorry if this sounds an obvious question as this is my first post but is this figure totally correct? Our child is due to go to nursery costing £494 pm. At what salary would the rate of tax / NI increase?

Thanks

mitchaa

redtraveller wrote: »

Sorry if this sounds an obvious question as this is my first post but is this figure totally correct? Our child is due to go to nursery costing £494 pm. At what salary would the rate of tax / NI increase?

Thanks

Sorry, I dont understand.

The maximum you can sacrifice through these schemes is £243 per person, so if both parents are offered the scheme, it is possible to get upto £486 worth of vouchers.

The saving depends on whether you are a basic rate taxpayer or a higher rate taxpayer.

The figures I quoted above (£243Gross = £167Net) are correct in respects to a basic rate taxpayer.
As a higher rate taxpayer (£243Gross = £143Net)

You start to pay higher rate at earnings over £43,875.