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

MartinLewisMoneyShowitv1

Hello everyone,

Just to let you know, the Martin Lewis Money Show is coming to the Sheffield Meadowhall Shopping Centre on 14th and 15th July as well as the Manchester Arndale Shopping Centre on the 17th and 18th July.

One of the areas (along with lots of other things) Martin will be discussing is childcare vouchers. If any of you have questions then please get in touch in advance!

If you have any questions please email: itvmlshow@itv.com. We would love to see as many of you as possible at the events!

Thanks,
Ed - MLMS team.

libspero

Hi guys,

We are due to have our first child in January and will probably start needing childcare the following September (2015).

I'm just wondering if anyone knows about eligibility under the new scheme?

The reason I ask is because I understand that both parents need to work full time, however my wife will be starting to train for her PGCE at that same time (hence the need for child care!).

Because she will technically be studying and not working, does that mean we will not eligible for childcare vouchers under the new scheme?

It seems a very [STRIKE]grey[/STRIKE] complicated area

rpc

Don't think it's law yet, but the consultation is at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/318953/PU1607_Tax_free_Childcare_response.pdf

The proposal has a minimum income requirement of £50 a week, so a PGCE almost certainly doesn't count. Some courses offer childcare assistance though.

You know you can join the existing childcare voucher scheme when the child is born and stay in it after the change? For one child in childcare, the new scheme isn't necessarily as generous as the old one.

libspero

rpc wrote: »

Don't think it's law yet, but the consultation is at[/url]

The proposal has a minimum income requirement of £50 a week, so a PGCE almost certainly doesn't count. Some courses offer childcare assistance though.

You know you can join the existing childcare voucher scheme when the child is born and stay in it after the change? For one child in childcare, the new scheme isn't necessarily as generous as the old one.

Hi RPC.. many thanks for that, sounds like we won't be eligible (which is what I suspected).

My wife handed in her notice now so doubt she could join through her work, and the accountant where I work just looked at me blankly when I asked about childcare vouchers (small company).

Looks like we'll have to stump up the full whack on top of paying for the PGCE on a single salary. Ouch!

rpc

libspero wrote: »

the accountant where I work just looked at me blankly when I asked about childcare vouchers (small company).

Try a different approach - start with "would you like to reduce your employer NI bill?" :-) My wife set up the vouchers at her school (a small, specialist one) and IIRC the scheme charged them 6%, they save 13% so even after the direct costs there is still a 7% saving.

Of course, there are indirect costs too through employer's admin and so on.

libspero

rpc wrote: »

Try a different approach - start with "would you like to reduce your employer NI bill?" :-) My wife set up the vouchers at her school (a small, specialist one) and IIRC the scheme charged them 6%, they save 13% so even after the direct costs there is still a 7% saving.

Of course, there are indirect costs too through employer's admin and so on.

Thanks RPC..

If they weren't phasing it out I would do that.. I can't see they will want to set up such a scheme just a few months before it is due to be replaced. A lot of effort on the companies part for a relatively small temporary saving.

Appreciate your support though

System

I wondered if anyone in the NHS is wondering whether to continue on current childcare voucher scheme or move to the new scheme in 2015?

Obviously the pension is changing to career average in April and therefore if continue in the current salary sacrifice set up it will reduce pension contributions and therefore reduce pension.

Current scheme is better as save NI, but i'm not sure if the saving now will outweigh the effect on pension. Could do with a calculator for this!

rpc

You also need to consider the impact of the schemes on how much your childcare actually costs you.

For some people, the old scheme is far better value. For others, the new scheme is better.

Assuming you take the full amount, your annual pension will reduce by £243*accrual rate, but your contributions will be lower too. You could always start up a personal pension, AVCs or purchase additional benefits if that is an option under the new scheme.

System

rpc wrote: »

You also need to consider the impact of the schemes on how much your childcare actually costs you.

For some people, the old scheme is far better value. For others, the new scheme is better.

Assuming you take the full amount, your annual pension will reduce by £243*accrual rate, but your contributions will be lower too. You could always start up a personal pension, AVCs or purchase additional benefits if that is an option under the new scheme.

Thanks for that rpc. I believe the accrual is 1/56. So would I therefore be correct in assuming the following:
Annual salary sacrifice =12*243 = 2916
Therefore pension reduction = 2916/56 = £52 annual (per year salary sacrifice).

The benefit vs government scheme is NI savings, therefore 2916*12% = £350. Also reduced pension contributions (my rate = 9.1% x 2916 = £265.35 (minus 32% tax/NI relief = £180) So basically is it worth saving £350+180 now (£530) to suffer a £52/year pension reduction?

Not sure if what I have said above is correct (can anyone confirm or otherwise?), but if so it has got to be worth making the savings now (so long as use the savings wisely of course!)

Fiona_T

I'm currently on mat leave - I've just gone onto SMP only following 6 months of SMP & OMP.

I signed up to childcare vouchers last month as a little birdie told me they couldn't take payment from my SMP.

I get my pay slip this week and they have taken the amount from my pay!

Can they do this?

Thanks