Chancellor's new childcare discount proposal

onlyroz

Mupette, the law simply states that any salary sacrifice arrangement can't be deducted from benefits. And so if you're purely on SMP then they can't take any salary sacrifice from this. If, however, your company pays something above SMP then the salary sacrifice can be deducted.

fancyabrew

great so we're going to be worse off once again! Don't know why I bother going to work. Our little girl is due to start full time nursery in a couple of weeks (she's 1) Both the wife and I work I'm a 20% tax payer and she a 40% and both get vouchers so with one child in nursery we'll be worse off. If you both work, have one child and are 20% tax payers you'll be quite a bit worse off per year to the tune of around £700. Also don't know where they get there figure of £6k'ish for the average child care cost, its costing us around £10k for a full time place.

mysk_girl

I'm currently trying to do sums to see if we are better off or not. OH currently has grandfather rights to sacrifice £243 as a higher rate taxpayer (he's been a member since before April 2011) and if he stops his salary sacrifice, his taxable pay goes up and we lose more child benefit. However, we have 3 children so we can potentially save up to £3600 pa.

Confused...

And when I was on maternity leave, I had vouchers deducted off my contractural pay but not from SMP.

mysk_girl

However, I think even if we personally lose out, that it is a good idea that everyone can benefit? At the moment, if your employer doesn't wish to offer the scheme, then tough luck. This sounds like it is available to everyone where both parents work?

I would be interested to see if self employed are covered, as I'm considering this at the moment.

Marshflower

Mysk_girl - it said on the news today that self employed are covered under the new scheme.

I'm so confused by these changes. They aren't due to come in to force until 2016 so DD will be in school by then, but if say we have another child - it will cost around £600 a month for his/her nursery place. If DH and I both get the max of £243, this is pretty much covered by the vouchers. We both earn 20% tax rate. Will we be better or worse off under the new scheme? Help! How does it work?

mysk_girl

Good news about self employed... I don't think they can get CV's at the moment. As for the sums, I'm trying to do them myself and not getting very far! But it is a long way off and many things may change by then...

mysk_girl

But I think, you currently both sacrifice £243/ month which saves you £76/ month. So your current saving is £152 / month. Under the new scheme you will have one child in care @ £600 / month so you can save £120/ month (20% of £600).

That is just my understanding of what they've announced so far, but it could be way off...

peachyprice

Gigglepig wrote: »

Peachyprice, women probably had heck of a lot more support from extended families and communities? and the standards were very different ... nowadays it is not acceptable to leave children unattended whilst for example working on a farm, or having young children looking after even younger children.

Mrs_Imp wrote: »

Because in those days it was the 'norm' to live with or near family, who would help out.

These days a lot of families live far from other family members, so the support network isn't there.

My eldest still goes to the childminder once a week, which has been a lifesaver, as my youngest has colic and cries most of the time she's awake.

:rotfl:
My eldest are 18, my youngest 11, it's hardly 'back in those days' that I and my friends and family had more than one child without the need for 'respite' care to deal with the terror of dealing with them on a daily basis.

Make-it-3

I'm sure the Martin will be along soon with a calculator to help us work out whether we are better under the new or old scheme!!! :money:

It does seem to depend on number of parents working and receiving CV's v number of children receiving childcare.

As I understand it, the current CV scheme will remain in place but not be open to new joiners, so if you are already in it you will be able to decide whether to stick with it or jump to the new one.

While its great that the scheme will be open to more people, I don't think the sums involved (given the high cost of childcare) are going to make a huge amount of difference to people (mainly women) returning to the workplace.

eilidhsmum

Hi all, interesting discussion.
I think we are going to lose out big time. My husband works full time and I work part time. We currently pay about £100 per month in childcare costs, but after tax and NI relief we actually only pay £58 as my husband is a higher rate tax payer. Both my children are in school already and they go to an out of school club. I've just read on the telegraph website that the voucher scheme is going to be withdrawn but only replaced with this new scheme for children up to 5 - so we lose the whole of the benefit.

My husband's current salary is in the middle of the £50 - 60k bracket so we are already starting to lose some child benefit (we have 3 children). The pay that the child benefit is based on is after any salary sacrifices so in losing the salary sacrifice of the child care costs we are going to lose out on even more child benefit as well.

We seem to be in a lose-lose-lose situation. I may as well not go to work!!!!

In fact I've just worked it out - we currently pay £696 for our child care a year. Under this new 'scheme' or lack of, we will in effect pay £1471. Our costs will more than double!!!!!!!