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

rpc

Tiggerwendy wrote: »

Our 3.5 year old was going to nursery and I am signed up to buying £243 child care vouchers. My husband also works but his employer doesn't have a voucher scheme.
Our childcare needs have changed and currently we only need about £80 a month, though from next July I will do, though probably on average £150 a month.
Given the change coming, should I cancel all payments for now (I already have a balance built up in there from the last couple of months) or reduce it down to really low?
Thanks

If you stop vouchers completely, you may find that you cannot restart and are forced into the new tax free childcare scheme.

I would set the vouchers to where you think they need to be long term. Remember that you can use them to pay for after school clubs and the like in future, they aren't just for nursery. A small surplus sitting in your account over and above your immediate needs isn't necessarily a bad thing.

onlyroz

golfgolf22 wrote: »

Can anyone advise re the £243 figure?
Is this the amount that is deducted from your wages, or is this the final amount that the childcare provider receives?

That's the amount deducted from your wages and transferred to your childcare voucher account. It's up to you how much you send to the childcare provider.

rpc

golfgolf22 wrote: »

Can anyone advise re the £243 figure?
Is this the amount that is deducted from your wages, or is this the final amount that the childcare provider receives?

Strictly speaking it isn't deducted from your wages, it just isn't given to you. It's salary sacrifice which changes your contractual pay rather than a payroll deduction.

You lose £243 gross so it costs you less because of tax and NI. The childcare provider receives the full £243.

Nodz

Hi all, I've got a bit of an issue with the childcare vouchers and I can't seem to find the answer anywhere so hoping someone could help.

Currently I'm claiming the top rate of £55 per week which I've been doing since the last week of August as I am in the Basic Rate.

The issue is due to the new Holiday Pay rules, where overtime, has to be taken into account, I have received backdated pay to conform to the new rules which has pushed me into the High Rate for this year, which means I'm now claiming to much.

So with this who do I let know and what are the likely results? Obviously it will involve talking to the Inland Revenue and lowering the amount I claim with Sodexo, but is it a case I can lower the amount I claim for the rest of the year to bring me on average in line or below the £28 per week high rate earners claim or will the tax man alter my tax code for next year? If the latter it would mean I'll go into the higher rate again next year..

Any help would be much appreciated there is nothing about this situation on .gov.uk or Sodexo

rpc

No you don't have a problem with claiming too much this year.

Your voucher entitlement is worked out by your employer carrying out a "basic earnings assessment" at the start of the tax year. It is a crude prediction of you estimated (future) earnings and that sets your voucher entitlement for the year. Whether your actual earnings are above or below this is irrelevant.

Full details start at page in in here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/368483/employer-qa.pdf

Your basic earnings assessment for this year is already fixed and your entitlement won't change until 6th April. BUT only guaranteed overtime payments are included in the assessment.

edit: your case is specifically covered by this bit on page 18

What happens if an employer gets the basic earnings assessment wrong?
If you have based the assessment on the information available at the time it is carried out, then it will be valid until the end of the relevant tax year, even if your employee’s circumstances change in the course of the year

onlyroz

In general, though, if you're getting close to the threshold where the voucher limit gets reduced you could consider putting a bit more into your pension

rpc

onlyroz wrote: »

In general, though, if you're getting close to the threshold where the voucher limit gets reduced you could consider putting a bit more into your pension

Just in case this isn't clear, this would need to be an occupational pension (by salary sacrifice, relief at source or net pay) as personal pension contributions are not accounted for in the basic earnings assessment.

Slightly weirdly, if it is a relief at source pension then only the net payroll deduction (80p in the £) is an excluded amount whereas by net pay (and obviously be salary sacrifice too) it is the full amount paid over.

Nodz

Thanks for the replies, its put my mind at rest as I thought I would get stung for going over. Its also good to know about the guaranteed overtime part as none of mine is guaranteed, we could have loads for a few months then nothing for the next few so none of that can be taken into consideration.

The pension idea is a good idea but unfortunately I'm not going to be able to sacrifice any income due to current commitments but again good to know for future reference.

Thanks again for your help :beer:

tightnorm

I am coming to the end of having to pay childcare.

I have you ever accumulated an excess of about £500 in my childcare account does anyone know how to get this money out

onlyroz

tightnorm wrote: »

I am coming to the end of having to pay childcare.

I have you ever accumulated an excess of about £500 in my childcare account does anyone know how to get this money out

You can use it for holiday clubs and after school clubs. PGL also accept vouchers as payment so you could (e.g.) send the kids on an adventure holiday, or even skiiing if you wanted...