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

tillygirl_2

tillygirl wrote: »

On our basis - therefore if you get £1800 per month and pay £186.20 before a tax saving of 20% and NI of 12% (making the net cost to you £126.16 per month)

Would someone be able to clarify this point for me please? a bit confused at how he gets to the £126.16?

rpc

tillygirl wrote: »

Would someone be able to clarify this point for me please? a bit confused at how he gets to the £126.16?

Vouchers are deducted from gross pay.

If £186.20 is deducted from gross pay, then that pay would normally have been subject to 32% deductions (for a BR tax, normal NI payer).

186.20 - (32% x 186.20) = 126.61

So the sacrifice has given you 186.20 of vouchers in exchange for 126.61 of net pay. That is what makes the vouchers a good deal.

The employer also saves 24.20 of employer NI, although some of that may be used to pay for the scheme. If the employer is having to give you "free" vouchers due to SMP then obviously that is a direct cost to them but they will make it up with NI savings when you are in work.

tillygirl_2

rpc wrote: »

Vouchers are deducted from gross pay.

If £186.20 is deducted from gross pay, then that pay would normally have been subject to 32% deductions (for a BR tax, normal NI payer).

186.20 - (32% x 186.20) = 126.61

So the sacrifice has given you 186.20 of vouchers in exchange for 126.61 of net pay. That is what makes the vouchers a good deal.

The employer also saves 24.20 of employer NI, although some of that may be used to pay for the scheme. If the employer is having to give you "free" vouchers due to SMP then obviously that is a direct cost to them but they will make it up with NI savings when you are in work.

Thanks again, much appreciated

SavySave

Back in 2004 I was going through a horrible divorce and solely responsible for my three young children (and I still am a single Dad). I received £6000 vouchers per annum through my employer. I believed that these were not taxable, so I did not put them on my tax return (my brain was somewhat frazzled).

The IR contacted me and told me that these were taxable and I was required to repay all tax due + a fine. I contacted my employer who said if the IR say they're taxable then they must be. So, I had to write a cheque to IR for £4100.

It now appears that I should have fought this - as the vouchers are indeed not taxable. I don't think I can do anything now - as 5 years have passed and so I'm outside the limit set to reclaim tax. Unless anyone at MSE thinks I would have a case because of mis-information.

So, my advice is: always check with a number of sources and don't just assume the IR is correct.

Dtol

I have been getting childcare vouchers for 4 years. I have been getting £243 voucher per month as a high rate tax payer. I am moving jobs and my new employer uses a different childcare voucher provider who says that now I can only get £126 as moving provider is essentially joining the scheme as a new user and hence the new rules apply.
Are they correct?

onlyroz

Dtol wrote: »

I have been getting childcare vouchers for 4 years. I have been getting £243 voucher per month as a high rate tax payer. I am moving jobs and my new employer uses a different childcare voucher provider who says that now I can only get £126 as moving provider is essentially joining the scheme as a new user and hence the new rules apply.
Are they correct?

Yes, they are correct.

sweaty_betty

Dtol wrote: »

I have been getting childcare vouchers for 4 years. I have been getting £243 voucher per month as a high rate tax payer. I am moving jobs and my new employer uses a different childcare voucher provider who says that now I can only get £126 as moving provider is essentially joining the scheme as a new user and hence the new rules apply.
Are they correct?

Yes, afraid so. I was in a similar position and looked into it quite thoroughly!

Blue_Monkey

Hello all,

Can you start getting CCVs before your child is in childcare? My husbands work does them but I'm not planning on going back to work just yet but thinking it would be good to get a good stash in CCV account ready for when I do.

BM

lovecake

Blue_Monkey wrote: »

Hello all,

Can you start getting CCVs before your child is in childcare? My husbands work does them but I'm not planning on going back to work just yet but thinking it would be good to get a good stash in CCV account ready for when I do.

BM

I'm no expert, although I do administer our scheme at work for two employees. As far as I'm aware, to be eligible to join a scheme at work, your child must be in childcare with a registered / approved childcare provider so I don't think your husband's employer would deem him as 'eligible' without your child actually being in childcare. With our scheme you have to fill out the carer's details and their registration number on the salary sacrifice form. Also, to be eligible the carer needs to be affiliated to the scheme network so if they aren't in childcare yet then you won't know if the childminder/nursery is affiliated or not.

I know this isn't as good as salary sacrifice, but if I were you I would just start putting the amount you would be giving up from your husband's salary in an ISA until you can join the scheme and that way you will already have some cash saved for childcare.

I'm sure someone will be along to correct me if I'm wrong, but that is certainly how it works with our scheme. HTH

sweaty_betty

Hi - I think it might depend on the childcare scheme, but as long as I gave the details of the nursery my LO was going to go to (in a few months time - and the place was confirmed), I was able to build up childcare vouchers while I was on maternity leave.

However I've since changed schemes and I'm not sure if this one allows it...