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

blueincubus

There's a calculator you can use here:
http://www.tax-free-childcare.info/childcare-savings-calculator/

But broadly the voucher schemes save 32% for basic rate tax payers (income tax, plus national insurance), the childcare voucher scheme saves 20% (income tax). The thresholds and limits are different but generally unless you're spending a lot of money on childcare (over £9000ish for basic rate tax payers, over £6000ish if you're both higher rate), and/or have loads of kids you'll be better off on vouchers.

Isitbedtimeyet

We have one child who we pay into the childcare voucher scheme for. We have just found out we are expecting our second this summer. Will we be able to get childcare vouchers for this child too before they are stopped and the new scheme introduced?

MBriggs82

Can anyone help?

I have set of childcare vouchers today with the scheme my employer uses. My husbands employer also offers childcare vouchers with an alternate provider.

We only use childcare one day a week so we do not need to register with both, but would we have been better registering through my husbands income as he is the full time, primary earner whereas I will be part time and earn under the tax threshold?

I hope that this makes some sense to someone and you can help.

Thank you!

SAMPOTT

Currently I work for an NHS trust and applied for the childcare voucher scheme via computershare that the trust said they use however it turns out it is salary sacrifice scheme (not sure what the difference is) which they use the voucher company to pay the nursery.

Unfortunately, I've just found out from my employer that I am not eligible for the current salary sacrifice scheme because they have set a company policy that no salary sacrifice can take you below the living wage which they have chosen as £8.50 rather than the government figure of £7.20. They will not take in to consideration my husbands salary to complete their means test.

It makes no sense to myself and my partner as we are now worse off by over £60 per month than we would be if they had used the £7.20 living wage figure from the government.

Are they allowed to do this? Is this fair?
How will the new Tax-free childcare scheme be managed?
Will the employer be able to change the eligibilty to the scheme as they see fit?

onlyroz

Surely if your pay is so low you don't pay much tax anyway?

SAMPOTT

onlyroz, I presume your post is for me?
Yes, I don't pay a lot of tax as I earn £16k. I pay tax on all earnings above the £11k 0% rate as everyone else does. Whether I pay a little or a lot of tax makes no difference to the fact I am entitled to tax benefit on childcare and am not receiving it.

My employer seems to have lumped all salary sacrifice schemes together in there decision to make the threshold for eligibility £8.50per hour. They said to me that it was in the best interest of the employee not to have their salary reduced to less than 8.5- per hour. This I can understand if taking a car lease via the employer as you may be stretching yourself beyond your means. However, in the case of childcare, I am still going to need to pay the childcare whether they allow the tax benefit or not, so essentially by refusing to accept me on the scheme they are making me worse off by £50-60 per month as that is the tax saving I would be making.

Surely these schemes are to help lower incomes, not exclude them.

penguingirl

SAMPOTT- I can't help with your query about living wage, but thought I'd also mention that salary sacrifice does also have an effect on your pension. I'm expecting at the moment and also work for the NHS, and because of this have decided I will wait until I can open a tax free childcare account rather than do vouchers. It was only by chance I noticed that it lowers your pension (as your average salary will fall)

SAMPOTT

Hi, wonderful news for you, such an exciting time

Thanks for the info, I did know this as they made me sign a form to say that I knew about the pension. I'm only on a 10month contract so I'm not sure paying in to the pension is worth my while anyway. If you work for less than 12 months in the NHS and then do not work in another affiliated pension within 2 years then they hand you your contribution back. So I gain nothing. I'm hoping my contract will be extended so I am taking the chance and paying in anyway.

I'm looking forward to the new tax free childcare scheme as that will benefit our home much more.

penguingirl

Ah yes that makes a difference- I'm probably in the NHS for the long haul so different situation!

rpc

As long as no illegal discrimination is involved then yes the employer can restrict the availability of salary sacrifice. Legally, the cannot sacrifice salary below the minimum wage but there is nothing explicitly stopping them from setting a higher threshold.

Whether your pension is affected depends on the rules of the scheme. My pension is based on pre-sacrifice salary. Personally, I think the NHS rules are stupid but they are what they are. Same impact can happen on maternity/paternity pay.