New Tax-Free Childcare scheme: Will it work for you?

SunsetZed

I'm not really sure what point you are making turtlemoose, is it that in theory you could carry over a balance to the next year?

I don't see how this would be an advantage as if you don't use the full £10k per child then this is unlikely to change the next year (I know that some people may move to do more work but I'm thinking of the overwhelming majority)

turtlemoose

No, I mean which one is correct - 1.5 or 1.9 ?

If 1.5 is correct, I'm better staying on vouchers even though only I can get them, partner can't.

If 1.9 is correct then I'm better off on the new scheme, taking the max, banking it, and then having another baby and maternity leave. I know you're ENTITLED to the scheme on mat leave, but I certainly couldn't afford any childcare for the older ones while on SMP, so I'd use my banked amount to pay for it then.

Lu_Lu

I have done a very quick calculation and for us ot would be better to stay on the childcare voucher scheme to the tune of just over £50 a month.

Both kids go to before and after school provision, childcare costs £4867 per year and the vouchers 'pay' for all of this. The new scheme would take off £973 (if it's the 20% thing) but we save more than that in tax and NI.

However, if it is the ability to claim £2K per year per child clearly this would be far better for us and only leave us with £867 per year to pay. However, not claiming vouchers would put DH up in the 40% tax bracket for a small amount of his pay.

I like that this has opened up access to help for those who work for employers who don't offer childcare voucher schemes but anyone who has a scheme would surely be better off staying in it? I hardly understand what has been offered so this may well be a sweeping statement.

SunsetZed

Sorry turtlemoose without understanding the figures that you're talking about I can't get my head around what you're saying to see how it makes a difference, it's probably just me!

Hi Lu Lu. In your situation the vouchers are definitely best as they save you £1866 per year and keep your other half out of the higher tax band. The new scheme is the 'the 20% thing' so if you used this then it would only save you £973 per year.

carozd

I'm a higher rate taxpayer but will be moving jobs soon so will be under the lower childcare voucher limit. I spend £100/month on childcare vouchers, so at the moment that's worth about £504 in unpaid tax I think. The new scheme would only 'pay back' around £240. Am I reading that right?