Childcare vouchers from employer

ironman1

Does anyone know how these work?

At the moment we pay £600pm in nursery fees. How does it work if you get Childcare vouchers as part of your pay? Can anyone tell me please?

Sorry if this is in the wrong section.

Firefox1975

I think they get taken off Pre Tax, therefore you save on the Tax element of the voucher.

i.e you earn £1,000 per mth, currently you would pay 20% tax on £1000, so say £200, therefore you take home £800, out of which you pay your childcare @ £600 so you have £200 left

with vouchers, they take the £600 off your gross pay, so only £400 left for tax, 20% of £400 is £80, so you are left with £380

so £180 better off.

obviously, ive rounded and ignored NI for simplicity.:cool:

ironman1

Sounds good. So if my gf earns £1320 per month before tax could she take the full £600 childcare fees and what would her take home a month be after they come out please?

tizerbelle

You can only get £55 week / £243 month of vouchers and that assumes your employer runs a childcare voucher scheme. If they don't you can't make them.

There's an MSE article here that might help http://www.moneysavingexpert.com/family/childcare-vouchers

You can put your girlfriends pay details into this site http://www.listentotaxman.com/ and add in the amount for childcare vouchers in the relevant box and it will work out her salary, tax and ni

ironman1

Thanks for all your help. I have to admit I just cant get my head round it! It seems anything to do with childcare is confusing.

Lovelyjoolz

Don't let it confuse you. It's not complicated, it's very, very simple.

Her employer takes £243 per month out of her gross salary each month and pays it directly to the nursery.

If you are questioning whether it's a good option for you, then yes, it always is, because of the tax you will save.

Because of what you save in tax & NI, the £243 deducted will only really cost you about £165 (i.e. she will have £165 less in her pay each month). So effectively, the government will pay £78 per month towards your childcare costs.

Couldn't be much simpler really.

Of course it all depends on whether her employer operates a scheme although frankly, it's SO easy to operate I can't understand why they wouldn't.

The figures I've quoted will vary according to tax codes. If you want a more accurate figure, give me her gross salary and her tax code and I'll happily work i out for you.

Takeaway_Addict

The reason why alot have stopped offering this or don't do it to start with is that because its a benefit if the person goes on paternity/maternity leave they still get paid the vouchers.

The only benefit for the company as far as I can see is a lower national insurance contribution but obviously if they end up paying someone £250 a month whilst on maternity it won't work in their favour.

pinkladyof66

i claim the full £243 of child care vouchers every month (the highest amount) and it works out that i have around £160 deducted from my salary so in fact I gain about £80 ish that is not taxed well worth it

gibson123

Takeaway_Addict wrote: »

The reason why alot have stopped offering this or don't do it to start with is that because its a benefit if the person goes on paternity/maternity leave they still get paid the vouchers.

The only benefit for the company as far as I can see is a lower national insurance contribution but obviously if they end up paying someone £250 a month whilst on maternity it won't work in their favour.

Nonsense

Childcare Vouchers are paid instead of salary - if your basic pay is £1,000 per month and you get £250 paid in childcare vouchers and £750 paid in cash, then your remuneration is £1,000. Therefore if you are paid 90% of salary whilst on maternity it should be 90% of £1,000 not 90% of £750. When you stop getting vouchers your salary should be reinstated.

You should be careful of two things:

1. The effect on tax credits if you get any
2. How this works if your employer pays contributions towards your pension, e.g. would the 6% of the pension contribution be based on the total remuneration or just on the "wage" part.

Takeaway_Addict

gibson123 wrote: »

Nonsense

Childcare Vouchers are paid instead of salary - if your basic pay is £1,000 per month and you get £250 paid in childcare vouchers and £750 paid in cash, then your remuneration is £1,000. Therefore if you are paid 90% of salary whilst on maternity it should be 90% of £1,000 not 90% of £750. When you stop getting vouchers your salary should be reinstated.

You should be careful of two things:

1. The effect on tax credits if you get any
2. How this works if your employer pays contributions towards your pension, e.g. would the 6% of the pension contribution be based on the total remuneration or just on the "wage" part.

No I don't think you are right

http://www.payingforchildcare.org.uk/data/files/Childcare_during_maternity_leave_April_2012.pdf

gibson123

:o:oI stand corrected and apologetic, some times us know alls need a good old humbling!!