Childcare Vouchers: cut childcare costs by £1,000/year Discussion Area

Spineytoad

Hi,
Query!
My husband works full-time I stay at home with 6 children. His employer has offered Childcare vouchers. We are not entitled to the childcare element of WTC as I don't work. Is it possible to claim childcare vouchers as part of salary sacrifice, claim extra Tax credits as assessable pay will have dropped? Sometimes we need childcare to cover hospital appts etc.

kashbakkate

Hi,
I have 3 children and am at home, we also don't qualify for working tax credit or childcare tax credit. My husband works for Royal Mail and we buy childcare vouchers gross of tax and Nat Insurance. As a result this does give us a lower gross income per year, and as result we do get a marginally higher rate of child tax credit as result. You are not doing anything wrong as you are declaring your actual gross income under the rules of the scheme according to your P60.
Good luck.

sly_dog_jonah

I have a question which doesn't seem to have been answered before, what happens to any 'credit' you have in a childcare voucher account if the provider goes bust?

In the light of possible reduction of this tax break in future my wife and I want to start saving for vouchers as soon as our baby is born so that if and when she returns to work we have plenty of voucher credit 'in the bank'. Even if she doesn't return to work I'm sure a few hours a week in a nursery will soon eat through the £55/week maximum you can build up through salary sacrifice.

ab7167

I'm currently on maternity leave with my second child and am on SMP. Work are continuing to fund my vouchers. Can this be reclaimed from a return to work bonus? Just like to be clear, not bothered either way. As it still means more money in my pocket each month when I need it, and can repay later.

Counting_Pennies_2

sly_dog_jonah wrote: »

I have a question which doesn't seem to have been answered before, what happens to any 'credit' you have in a childcare voucher account if the provider goes bust?

In the light of possible reduction of this tax break in future my wife and I want to start saving for vouchers as soon as our baby is born so that if and when she returns to work we have plenty of voucher credit 'in the bank'. Even if she doesn't return to work I'm sure a few hours a week in a nursery will soon eat through the £55/week maximum you can build up through salary sacrifice.

I would have thought the majority of these companies are sound. There are only a few providers and many parents out there using them.

Remember when you do purchase the vouchers remember they only have a shelf life of a year.

ibelongtoguy

I wonder if someone could advise or point me in the right direction?

I am going back to full time work in a few weeks and salary sacrificing £55 per week in CCV's.

I would like to try and calculate what I should expect to take home each month in my pay packet - is there any online calculator that will do this?

I have used http://listentotaxman.com/ because I want to take into consideration student loan and pension payments.

I just want an accurate idea of what I'll actually bring home so I can draw up a budget.

Should I take my salary, minus the £55x52, take this off and then enter that figure as my salary??

So confused! Thanks for any tips.:p

emeraldbugle

I just need a simple explanation for applying for tax credits if I use these vouchers.

I declare my income (after the salary sacrifice)
I declare the childcare costs (after the value of the vouchers)
I declare my P11D income (omitting the value of the childcare vouchers)

For example, Say income £32,916. I purchase the maximum vouchers of £243/wk (or £2,916/year). Childcare costs are £145/wk. (£7,540/yr)

Salary after sacrifice is £32,000, this is declared to Tax Credits.
Childcare costs is £7,540 less vouchers of £2,916 = £4,624, is this the amount declared to Tax Credits?
P11D form showing the value of £2,916 for the vouchers, I do not declare this amount to Tax Credits.

Is my understanding correct?

emeraldbugle

Could someone tell me how it can be set up with the employer so a salary sacrifice does not affect my pensionable salary and death in service benefits?

Has anyone done this?

scottsumner

emeraldbugle wrote: »

Could someone tell me how it can be set up with the employer so a salary sacrifice does not affect my pensionable salary and death in service benefits?

Has anyone done this?

No this cannot be done. This scheme is what it say's on the tin, you sacrifice your salary, therefore your pensionable pay will drop and death in service benefit could drop if it is linked to your salary.:(

It can also effect mortgage applications if salary sacrifice will nto be taken into account as your income will be lower.

You would only be able to get around the pension bit by your employer agreeing to increase any contribution % they make?

emeraldbugle

scottsumner wrote: »

No this cannot be done. This scheme is what it say's on the tin, you sacrifice your salary, therefore your pensionable pay will drop and death in service benefit could drop if it is linked to your salary.:(

It can also effect mortgage applications if salary sacrifice will nto be taken into account as your income will be lower.

You would only be able to get around the pension bit by your employer agreeing to increase any contribution % they make?

Thanks, but it can be done. The employer can agree to base benefits on the pre sacrificed salary. It can also show on your payslip as a separate amount which you can then use for mortgage applications.

It will just be any statutory benefits that are based on the lower salary, I'm hoping I won't need those!