Should I be getting Childcare vouchers?

chelseablue

Hi all


I work full time and have a 2 year old son who goes to nursery 3 days a week.


My employer offers childcare vouchers but I do not currently get them.


One of my colleagues says Im mad for not applying for them so now Im starting to wonder if I should?


Obviously my take home pay would reduce so wouldn't I be worse off a month?

Tigsteroonie

Are you paying for your son to be in nursery?

If so, then I believe the childcare voucher scheme would be advantageous to you. The deduction would be pre-tax, whereas now you pay those nursery fees post-tax. You'd be losing the money from your wage packet but getting vouchers in exchange to pay the pesky nursery invoice.

I'm sure somebody will give you the technical answer and percentages in due course

Lokolo

They are tax deductible (both IT and NI) from my employer. So I can reduce my gross pay by £1 (which is then 68p after tax on 20% tax and 12% national insurance), for £1 in child care vouchers.

So for £1 gross pay you'd get either 68p in cash or £1 childcare vouchers.

chelseablue

Thank you yes I do pay, it costs £760 a month

Kynthia

You pay tge nursery the same you do now, but it costs you less because you paid for a portion with your pre-tax salary. Therefore you get more in vouchers than you lose in take home pay.

Mupette

I work for a childcare voucher company, I would say yes, no i am not paid to say that,

What i mean is you will save on the Tax and NI deductions as the voucher value is deducted before your Tax and NI is so less to take from you.

rpc

Provided that you do not receive the childcare element of tax credits, there isn't really a downside. By not taking the vouchers, you are paying more tax and NI than you have to.

If you do receive the childcare element of tax credits, you are likely to save less with vouchers than the reduction in tax credits would be so you aren't better off taking vouchers.

Mupette

http://www.giveyourselfachoice.com/


You should read this too

susancs

You should also get 15 hours free from the term after your child turns three so that will reduce your bill too. You may even get 30 hours from September 2017 if your nusrsery particiapte in the scheme and your circumstances qualify you.

lobbyludd

there is a calculator somewhere that shows whether you are better off using child care vouchers or not - I can't currently find it, it may even be on this site. however from what I remember unless you are earning enough to be in the higher tax bracket, then it is not cost effective to claim the child care vouchers as you lose a greater amount in tax credits than you gain in not having the vouchers taxed - also you can't claim vouchers for the whole of your childcare - the amount is fixed - you'll need advice, or to work it out yourself, for your exact situation, not based on other people's yes or no on a forum - my employer will help people work out what is best for them, perhaps yours will too? ask HR?

onlyroz

Assuming that you don't qualify for tax credits and you earn enough to pay income tax and NI then childcare vouchers are a good deal. If you are a basic rate tax payer then you can claim £243 a month. The saving comes from the income tax and NI that you would have paid on this amount.

The vouchers can be claimed until the child turns 16 and can be used to pay for after school and holiday clubs once they start school.