Salary sacrifice childcare vouchers - do they lower pensionable pay?

Mupette

I work for one of the largest Childcare Voucher companies,

It is against the law to allow a wage to drop under the minimum wage.

BUT, she doesn't earn enough to pay any tax/NI (works part-time) so there's no saving there.

This was what i was looking at, on your original post, Although bear in mind it is the employer who decides (not us) the rules of who can and can't apart from the factor that if you do not pay tax or national insurance (part time) then the salary will be to low to be considered.
It will be based on actual salary take home, a few exceptions are guaranteed bonus each year, you will be asked about private pensions, aka have you opted out of the state pension.

I would advise you to speak to HMRC as they tell us what amounts each year comes under which band.

For parents joining a scheme from 6 April 2011, the Government has capped the amount of childcare vouchers a taxpayer can request each month to £243 for a Basic rate tax-payer, £124 for a Higher rate taxpayer and £110 for an Additional rate taxpayer. Parents who joined their employer's childcare voucher scheme before 6 April 2011 can continue to request up to £243 a month (£55 a week) in childcare vouchers, regardless of their tax status, providing they remain in their employer's scheme (i.e. they have received a childcare voucher in the last rolling 12 month period).

This link will give you an idea of potentially can be claimed.

https://myaccount.computersharevoucherservices.com/Parent/EligibilityCalculator.aspx



Although i did find this for you for NHS Employees

NHS pensions

The following information only applies to employees who work for the National Health Service.

In a Career Average Revalued Earnings (CARE) scheme, like the 2015 NHS Pension Scheme, pension benefits are built up on a year by year basis based on your actual pensionable earnings in each year. Therefore entering into any salary sacrifice arrangement (e.g. Childcare Vouchers, Lease Car Schemes etc) that reduces your gross pensionable earnings will have a negative effect on the amount of pension you are able to build up in that year. The overall effect from participating in any salary sacrifice scheme would be to reduce the amount of final benefits you earn.

If you are unsure as to how any salary sacrifice arrangement you are currently a member of, or wish to join, may affect you then please talk to your employer.

HTH

JJG

What's the benefit of doing the salary sacrifice, if you're not earning enough to pay tax and NI?

Nebulous2

polgara wrote: »

Not with working part time as it didn't accrue the same way but technically yes you could get a higher band in the last 3 years and benefit that way, however the NHS generally doesn't work that way. For instance it would be almost impossible to go from a Band 2 to a Band 8c for instance in your last 3 years.

It used to be common for people to move to nights for their last two years. So the night allowances counted towards final salary. It meant a significant boost to pension.

[Deleted User]

Mupette wrote: »

It is against the law to allow a wage to drop under the minimum wage.

BUT, she doesn't earn enough to pay any tax/NI (works part-time) so there's no saving there.

Yes I understand that. But just because you don't earn enough to pay tax/NI doesnt mean you're below minimum. It depends on the number of hours you work.

Example. She earns £15 an hour but only does 16 hours a week so annually its not a huge amount. but there is slack there until you hit minumum wage.

I made a mistake she does pay some NI not much. But I agree there is not a lot of point if you dont pay tax/NI anyway.

I mentioned pensions because, previous to 2015, you could have saved 7% on the pensions contribution by using it for vouchers. But now, in effect, you're doing yourself out of it in effect.

Like I said, she does pay "some" NI now. 13% I think. So even if she got some vouchers she'd save this 13% (until her pay went below the NI threshold again).

Mupette

sorry rule of thumb is if you don't pay tax you can't claim.

do have a nose around the website i gave you there is faq there, or in fact give them a call. don't worry you won't end up speaking to me i'm not on the phones anymore

[Deleted User]

Mupette wrote: »

sorry rule of thumb is if you don't pay tax you can't claim.

do have a nose around the website i gave you there is faq there, or in fact give them a call. don't worry you won't end up speaking to me i'm not on the phones anymore

Sorry mupette - I disagree. That would only apply if you worked full time. As Im sure you agree, whereas I appreciate the minimum wage rules, since minimum wage is an hourly thing it is totally dependent on how many hours you work.

Checking previous year - wife has paid no tax previously (but has paid NI) and been able to get vouchers.

Mupette

Depending on your circumstances, you could save up to £933* a year on your childcare costs.


The Government has set a limit for childcare vouchers based on tax bands:

› £243 each month for a Basic rate taxpayer
› £124 each month for a Higher rate taxpayer
› £110 each month for an Additional rate taxpayer


You have to be a tax payer, If your wife does not pay tax she will not qualify,

http://www.computersharevoucherservices.com/parents/Pages/how-much-can-i-save.aspx

If she pays little NI it makes no difference, you have to pay tax to benefit from this, they cant take the salary sacrifice before tax and NI are deducted if there is not tax being paid, this is set in stone by HMRC.


I gave you a link to the online calculator how much did it tell you, that your wife could claim in vouchers?