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

wanttoberich

My employers are just starting to issue childcare vouchers using salary sacrifice. The word Bonus was used. Can someone please tell me as my employer can't, how do the child care vouchers show on your wage slip? Is the amount of the vouchers get added into the gross amount and then show as a deduction?Will having childcare vouchers affect my being able to get anything earnings related. eg a mortgage
at any point in the future?

abitrubbish

Jus_H wrote: »

There should be no effect on you pension as the contributions you make to your pension are taken at source and therfore should not change.

Regards

Jus :rotfl:

It may not affect the contributions YOU make to your pension, but it may well affect any contributions made by your employer...

Because the childcare vouchers are done through salary sacrifice, it does reduce your gross salary figure. This can impact a number of calculations based on this figure, including the amount of pension contributions your employer makes (this is usually a % of gross salary).

It can also affect your SMP if you happen to go on maternity leave whilst receiving vouchers...

So if either pensions or maternity pay are things which are particularly relevant to you, it is worth doing more research to see exactly how this will affect you. Your employer may (as mine did) have a policy of making maternity payments based on "notional" gross salary, ie before vouchers. However there is no legal requirement for them to do so. It is less likely they will make such concessions when it comes to pensions.

RTL

My company is just starting up the nursery vouchers scheme - whihc is great for me BUT one down-side I wasn't aware of is salary sacrifice means new terms & conditions & effectively a change of your salary.

Worth considering if you get % based benefits e.g. bonuses, salary increases, pension contributions - these can be calculated on the lower salary (after the sacrifice).

If you are not taking the full amount this might not work out such a great deal???

Alison_Jones

Hi there

HMRC don't really mind how the vouchers are shown on your payslip - it's really up to your employer. Most employers show your full pay, with the vouchers shown separately as a reduction in salary or a deduction from salary. This means the vouchers shouldn't have any effect on your ability to get a mortgage.

Most employers also base pension benefits and contributions on full pre-sacrifice salary, but it's worth checking with them. Unless you're on a final salary pension and you're intending to leave work in the next few years, any loss of pension by using childcare vouchers is very unlikely to outweigh the savings you'll make.

With SMP, the only earnings related part of the benefit is the 6 weeks at 90% of pay. So, the most you'll lose out on by using vouchers is 10% during this 6 week period ... which is less than the 33% that basic rate taxpayers save by using the vouchers. Most voucher providers cover themselves by advising people to opt out well before maternity leave, but think carefully because it might be in your best interests to stay in the scheme until the last minute.

I found KiddiVouchers to be really helpful on all this. Their standard scheme rules leaflet covers a load of technical questions and can be downloaded for free from the employer section of their website - www.kiddivouchers.co.uk. They're also a lot cheaper than the rest of the market, so if your employer hasn't got a scheme yet then I'd recommend starting there. Hope that helps!

TheWaltons_3

Alison_Jones wrote: »

Hi there

HMRC don't really mind how the vouchers are shown on your payslip - it's really up to your employer. Most employers show your full pay, with the vouchers shown separately as a reduction in salary or a deduction from salary. This means the vouchers shouldn't have any effect on your ability to get a mortgage.

Most employers also base pension benefits and contributions on full pre-sacrifice salary, but it's worth checking with them. Unless you're on a final salary pension and you're intending to leave work in the next few years, any loss of pension by using childcare vouchers is very unlikely to outweigh the savings you'll make.

With SMP, the only earnings related part of the benefit is the 6 weeks at 90% of pay. So, the most you'll lose out on by using vouchers is 10% during this 6 week period ... which is less than the 33% that basic rate taxpayers save by using the vouchers. Most voucher providers cover themselves by advising people to opt out well before maternity leave, but think carefully because it might be in your best interests to stay in the scheme until the last minute.

I found KiddiVouchers to be really helpful on all this. Their standard scheme rules leaflet covers a load of technical questions and can be downloaded for free from the employer section of their website - www.kiddivouchers.co.uk. They're also a lot cheaper than the rest of the market, so if your employer hasn't got a scheme yet then I'd recommend starting there. Hope that helps!

do you work for them?

Jus_H

I have noticed that Kiddivouchers have been continouslely referred to through out this thread. Possibly by employees of the company.

There are lots of voucher providers which have appeared over the last few years.

The main big companies are:

• Accor
• Sodexho
• Busy Bees
• Leap Frog
• Kidsunlimited
• Co-operative

and there are lots of others:

• Kiddivouchers
• Childcare options
• Fideliti
• Gemelli
• Abacus

to name just a few.

I would reccommend any employer looking at implementing a scheme to first read the guidance from the Daycare Trust (which includes a list of lots of providers, and guidane to implement a scheme without a provider!!) then look at a wide variety of providers to see who can best meet the needs of the company and the employees.

Also don't forget to check through Maritins guide :money:


Regards to all

Jus - Expert Advice on Childcare Funding

Alison_Jones

Hi there

In response to previous threads, no I don't work for KiddiVouchers but I just think they're a really good company. They've helped me to understand a lot of the issues around childcare vouchers and they charge a lot less than every other provider, so I think it's only fair enough that I recommend them.

However, to be a bit more objective, here's what I think you or your employer should think about when you select a voucher provider:
- Can you get through on the phone to speak to a real person, or are you kept on hold?
- Is marketing material included free?
- What are their average take-up rates?
- Do they provide electronic and paper vouchers?
- Does the HR department have to be involved when parents change their voucher amount, or can parents order vouchers straight from the provider?
- Does the voucher provider routinely recommend that employers seek HMRC approval for their schemes?

It's perfectly possible for employers to run their own schemes - it's just up to each company to decide whether the cost of self-administration is higher than paying an external provider to do it.

Hope that helps, Alison

halia

Jus_H wrote: »

There should be no effect on you pension as the contributions you make to your pension are taken at source and therfore should not change.

Regards

Jus :rotfl:

there can be an effect on pension if by taking the vouchers as partof your pay packet the actual cash you get goes below the Tax/NI cut off point.

I'm in this situation, because I only work 2 days a week my weekly earnings are lower.

Here's an example with MADE UP figures (not giving away what I earn)

You work p/t and earn £120 a week. You can get up to £55 a week as childcare vouchers but taking the full £55 would take your pay to less than £65/week. You need to get at least £90 (I think the tax cut off ia between £90 and £100) a week to keep up your entitlement not just to pension but state benefits.

So you will probably only be able to take £20-£30 of your pay as childcare vouchers.

HTH

Ladybump

My work has jjust changed from using Accor, where I got £60 of childcare vouchers per month which I had to declare to the Inland Revenue so it could be classed as a "benefit" and tax code amended to reflect this. We are now going to be using the Salary Sacrifice scheme with Busy Bees. I assume I need to tell IR that I am no longer receiving the former amount, but do I need to inform that I am part of salary sacrifice scheme?
Thanks

Lolly68

Hiya

I receive £243 per month from my employer who uses Accor vouchers. My partner owns his own limited company (with no PAYE staff). Can he also claim the same amount through the company? And if so, how? It seems unfair if he cannot because if he was employed by an employer he would be able to.

If anyone can let me know the answer. I would be grateful.