childcare vouchers /salary sacrifice.

branasco

Situation.. employee is just above the earnings limit to receive child benefit, and at present pays childcare costs "up front" in cash. IF he were to sacrifice some of his salary and get childcare vouchers instead, would his salary be regarded as the lower figure for tax, child benefits etc ? ( hopefully it would fall below the threshold )
Thanks

smileylondongal

This is a real minefield and the only way my husband could find this out was to firstly approach his payroll as they would be the ones doing all of the ground work on it, and also called the childcare voucher provider (who were sort of helpful but referred him back to payroll!). Perhaps speak to payroll first and see if they can't work it out for you?

I don't know anything about the tax credit/child benefit side of things, I'm afraid.

honeypop

If it's a true salary sacrifice scheme for the childcare vouchers, then contractually his salary will be lowered by that amount and he will officially be on the lower salary, which would indded benefit you for things like child benefit, tax credits etc. A lot of smaller employers (or ones who don't know better) don't actually offically lower the salary as a contractual change though, they simply deduct from the salary for the vouchers and on paper at least the employee is still on the higher, original salary.

suicidebob

He will have a lower gross pay, but will earn more (childcare costs * 11%), as he will pay no NI.

http://www.hmrc.gov.uk/specialist/salary_sacrifice.pdf