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

Alison_Jones

Hi there

If you work for yourself through a limited company then you can set up a childcare voucher scheme. You can either pay yourself vouchers in addition to any salary you're drawing (even if you aren't drawing any!) or, if you pay yourself enough, you can have vouchers through salary sacrifice. I'd recommend looking at www.kiddivouchers.com - in the employer downloads section there is a leaflet for small businesses.

juststarting_2

Just looking into this as I am returning to work. I have talked to my childminder and her attidude is she doesn't care how she gets paid as long as she gets paid but I am struggling to find infor for her on how to register. Does it depend on who provides the vouchers? I am not sure who provides ours as I don't start until September and my other half is still waiting to hear from HR. Sorry if this sounds confussed but I am generally on confussed about the whole thing. Any help welcome.

MusicMaker

When my wife and I enquired about taking childcare Vouchers, we assessed the impact on our pension and decided it wasn't for us. Pension contributions would not be paid on any portion of our wage we took in vouchers reducing our pension paid on retirement. In addition, our entitlement to Tax Credits now would have reduced accordingly.

We found it better to simply declare what we had paid for childcare to the tax credits office and take what was paid to us by them every four weeks.

During holidays, my employer (NHS Trust) offers discounted play schemes with local holiday clubs. It cut the cost of these in half. Anything my employer pays toward my childcare does incur a tax liability which I pay over the following financial year, this is at a rate of 22% of the amount they pay for me.

It is quite difficult to work out which way is best, and can be a bit complex, but we found it financially better to forget the vouchers.

This is with two children at school age, and a younger child in nursery.

Don't forget that children age 3 are entitled to a certain number of hours of free nursery education a week. Our private nursery fees were reduced accordingly due to this entitlement.

bikedo

I'd be very grateful for any advice. I buy £161 worth of childcare vouchers every month from Busy Bees. I've worked out that I should save about £53 and notice a drop of about £108 in my salary. However, I only seem to be seeing a drop of about £40! Its taken me a while to cotton on due to the funny way I get paid. I work for the NHS full-time, but technically have two jobs. I actually do the same job across two services but because of the way my trust works, I get treated as if I'm two people. So this means I have two pay numbers, two payslips etc. So I ordered the vouchers through one of those posts. I earn approx £30k gross across both posts so am a basic rate tax payer. I guess I'm trying to check out: a) that I'm right in thinking I'm not paying enough for my vouchers, and b) whether it could be due to the weird way my wages are set up? I get two payslips, only one of them has my tax code, the other one (the one where my vouchers are deducted from) only has BR in the tax code box. And, on that payslip, no National Insurance is deducted. Prior to me starting to buy the vouchers, both payslips amounted to the same take-home salary, and my total various contributions and take-home were identical to a colleague on the same salary with only one payslip, so I was happy that it was all correct.

Can anyone help me shed any light on why the salary sacrifice is so much lower than it should be? Don't get me wrong, I'm not moaning and paying £40 a month for £161s worth of childcare is lovely, but now that I know I'm panicking in case BusyBess (or work) realise their mistake and bill me for hundreds of pounds!

I'd be very grateful for your thoughts or any advice. I probably will call BusyBees in the morning (and risk the bill!) but wanted to check it out with yourselves first.

Cheers
Bikedo

helen167

Would I be better off with Childcare vouchers? I earn £9500, nhs nurse and pay £350 monthly to nursery for one child. Soon will have second baby. Please help.

danjerman

Hi, can these childcare vouchers be used for pre-schools? We've just put our toddler in pre-school and are both running our own Ltd company. We'd be happy to do a salary sacrifice for some vouchers if they are pre-tax.

Thanks
DM

Ama

You can use the vouchers for all forms of childcare so long as it is registered. If your child is going to a preschool, then it would be worth enquiring about the Nursery Education grant as well.

Ama

bikedo wrote: »

I'd be very grateful for any advice. I buy £161 worth of childcare vouchers every month from Busy Bees. I've worked out that I should save about £53 and notice a drop of about £108 in my salary. However, I only seem to be seeing a drop of about £40! Its taken me a while to cotton on due to the funny way I get paid. I work for the NHS full-time, but technically have two jobs. I actually do the same job across two services but because of the way my trust works, I get treated as if I'm two people. So this means I have two pay numbers, two payslips etc. So I ordered the vouchers through one of those posts. I earn approx £30k gross across both posts so am a basic rate tax payer. I guess I'm trying to check out: a) that I'm right in thinking I'm not paying enough for my vouchers, and b) whether it could be due to the weird way my wages are set up? I get two payslips, only one of them has my tax code, the other one (the one where my vouchers are deducted from) only has BR in the tax code box. And, on that payslip, no National Insurance is deducted. Prior to me starting to buy the vouchers, both payslips amounted to the same take-home salary, and my total various contributions and take-home were identical to a colleague on the same salary with only one payslip, so I was happy that it was all correct.

Can anyone help me shed any light on why the salary sacrifice is so much lower than it should be? Don't get me wrong, I'm not moaning and paying £40 a month for £161s worth of childcare is lovely, but now that I know I'm panicking in case BusyBess (or work) realise their mistake and bill me for hundreds of pounds!

I'd be very grateful for your thoughts or any advice. I probably will call BusyBees in the morning (and risk the bill!) but wanted to check it out with yourselves first.

Cheers
Bikedo

I think your best bet will be to speak to your payroll department. I don't think Bussy Bees would be in a position to shed any light on the matter. You might get a bill but you can always negotiate to spread the cost.

Ama

MusicMaker wrote: »

When my wife and I enquired about taking childcare Vouchers, we assessed the impact on our pension and decided it wasn't for us. Pension contributions would not be paid on any portion of our wage we took in vouchers reducing our pension paid on retirement. In addition, our entitlement to Tax Credits now would have reduced accordingly.

We found it better to simply declare what we had paid for childcare to the tax credits office and take what was paid to us by them every four weeks.

During holidays, my employer (NHS Trust) offers discounted play schemes with local holiday clubs. It cut the cost of these in half. Anything my employer pays toward my childcare does incur a tax liability which I pay over the following financial year, this is at a rate of 22% of the amount they pay for me.

It is quite difficult to work out which way is best, and can be a bit complex, but we found it financially better to forget the vouchers.

This is with two children at school age, and a younger child in nursery.

Don't forget that children age 3 are entitled to a certain number of hours of free nursery education a week. Our private nursery fees were reduced accordingly due to this entitlement.

Hi musicmaker you are are right in pointing out that vouchers do affect your pensions. It is just a small amount that it wouldn't have that much impact when you retire. The maximum that you can take in vouchers is £55 per week and what that means is that you will not be paying pension on that amount. If yourself and your partner are standard rate tax payers and went for £110 per week, you would save around £188 per month.

With regards to tax credits, some people are actually better off taking vouchers. You have to do a complicated calculation to determine whether you are better off or worse off going for childcare vouchers. I wouldn't want to bore anyone here with what that entails.

Childcare vouchers are good for people who pay higher rate tax and those who do not qualify for financial assistance due to their income.

bikedo

thanks Ama, I phoned Busy Bees and Payroll and neither of them saw anything wrong. Busy Bees are getting their money so their happy. And Payroll checked through everything and said it was all right their end. So we've doubled DS's time in nursery! I suppose there's a chance that incrreasing the amount of vouchers will trigger something that will fix it, but its worth the risk! Cheers for the reply.