Tax Credits/Childcare Vouchers

Marmot

Hi,

I'm a bit confused about Tax Credits & Childcare Vouchers and I'm wondering if anyone on here can clarify a bit for me!

I understand that if I work and pay for childcare then I may be entitled to Tax Credits (I think this is Working Tax Credit), but also that some employers provide Childcare Vouchers, which are a salary sacrifice scheme.

So my employer do provide Childcare Vouchers but I've just seen something on the HMRC website which says you may not always be better off using salary sacrifice schemes and may be better off with Tax Credits.

I may be being a bit dim but why would it sometimes be better to not use the vouchers and instead get Tax Credits? And I'm guessing that you can't do both?

Thanks for any assistance!

Marmot

xylophone

http://www.hmrc.gov.uk/calcs/ccin.htm
Does anything here help at all?

caz246

I've just posted something similar. I pay over £175 a week in childcare and seems I may be better off with both but want to be sure I won't be out of pocket if I did go ahead and do the salary sacrifice.

shedboy94

caz246 wrote: »

I've just posted something similar. I pay over £175 a week in childcare and seems I may be better off with both but want to be sure I won't be out of pocket if I did go ahead and do the salary sacrifice.

You can't claim from TC's and vouchers for the same childcare - if your cost are £175 and you get £75 in vouchers for example, the costs held by TC's should be £100

caz246

shedboy94 wrote: »

You can't claim from TC's and vouchers for the same childcare - if your cost are £175 and you get £75 in vouchers for example, the costs held by TC's should be £100

There are special circumstances where you can claim both and I fall into this category as I pay more than £175 per week for one child. This is copied from the turn 2 us website

Exceptions – when you would be better off with childcare vouchers


Most people are better off claiming help with childcare through tax credits instead of using childcare vouchers from their employer. However, there are two exceptions to this rule when childcare vouchers may be the better option. These exceptional cases are:

• Where your income in this tax year has fallen by more than £2,500 relative to your income last tax year
• Where your childcare costs exceed £175 per week for one child in childcare and £300 per week for two or more children in childcare

If either of these circumstances apply to you then you may be better off claiming help with childcare costs through vouchers rather than through tax credits.
Things to be aware of:

• If you are in the first group the maximum you could gain through using vouchers rather than tax credits is £87.45 per year
• If you are in the second group you can claim the maximum amount allowed for under tax credits (£175 per week for one child in childcare and £300 per week for two or more children in childcare), and you could get the difference between this and what you actually pay in childcare in childcare vouchers.

shedboy94

caz246 wrote: »

There are special circumstances where you can claim both and I fall into this category as I pay more than £175 per week for one child. This is copied from the turn 2 us website

Exceptions – when you would be better off with childcare vouchers


Most people are better off claiming help with childcare through tax credits instead of using childcare vouchers from their employer. However, there are two exceptions to this rule when childcare vouchers may be the better option. These exceptional cases are:

• Where your income in this tax year has fallen by more than £2,500 relative to your income last tax year
• Where your childcare costs exceed £175 per week for one child in childcare and £300 per week for two or more children in childcare

If either of these circumstances apply to you then you may be better off claiming help with childcare costs through vouchers rather than through tax credits.
Things to be aware of:

• If you are in the first group the maximum you could gain through using vouchers rather than tax credits is £87.45 per year
• If you are in the second group you can claim the maximum amount allowed for under tax credits (£175 per week for one child in childcare and £300 per week for two or more children in childcare), and you could get the difference between this and what you actually pay in childcare in childcare vouchers.

I never said you couldn't get vouchers and help from tax credits - I said you couldn't claim for the costs covered by vouchers.
If you have 1 child and your costs are £200pw......you can claim £25 in vouchers and £175 as your costs to TC's, however if your costs are £200 and you get £100 in vouchers, the costs that TC's can take into account is £100