Guide discussion: Tax-Free Childcare

dan1981

I'm pretty sure we're better off using the voucher scheme offered by both of our employees at the moment - could someone please confirm?

I earn circa 47k plus a non-guaranteed bonus of approx £3k

Wife earns approx 14k part time. Both have access to voucher schemes through our employers.

Childcare costs are around £120 / week for a 9 month old.

Thanks

mrbg07546

CrashJPMorgan wrote: »

Latest problem I've had is that I topped up my account with some money and on the same day it usually shows "HMRC top up £X" but no top up this time. It says I've got money left in my entitlement period, so not sure what's going on.

I had that. They mistakingly disabled. Y tax free childcare as wife was on meternity leave. Annoying

rpc

dan1981 wrote: »

I'm pretty sure we're better off using the voucher scheme offered by both of our employees at the moment - could someone please confirm?

I earn circa 47k plus a non-guaranteed bonus of approx £3k

Wife earns approx 14k part time. Both have access to voucher schemes through our employers.

Childcare costs are around £120 / week for a 9 month old.

So on annual childcare costs of £6240, you will save £1248 with tax free childcare.

With vouchers, you save £1560 (assuming you are a higher rate taxpayer and that your wife is still in the basic rate band after deductions). The bonus is ignored for the purpose of your earnings assessment, pension deductions etc would be included to bring the salary down.

So yes, vouchers are better on a basic analysis.

sheerhunnery

Can anyone tell me if tax-free childcare has the same limitations as the vouchers please? I get no benefit from the vouchers because I earn only slightly above the minimum wage. Does the tax-free scheme mean the government won’t top it up if I put money in for the same reasons? My wife who earns much more than me gets the full voucher help but I get nothing as an individual! I can’t find information on this anywhere.

Mupette

https://www.giveyourselfachoice.com

sheerhunnery

Mupette

How many are aware that if you have a childcare voucher account and currently not taking a voucher will not be able to return to get anymore vouchers after April?

Or that after April you will not be able to sign up to childcare vouchers.

If you are not taking a voucher now but intend to later, give your voucher company a call and enquire about ..

A, can you reduce your salary sacrifice to the minimum amount (could be as little as £20 pm rather than the full £243, especially at a time when you don't want to take the full £243) (also ask about your employer's cut off point so you know what date you have to make any changes to your order to take effect in the same month.

B, Does your employer accept refunds? If you have a stash of vouchers and think that will do you, what about cashing them back in, taking the minimum amount at the same time. (you will have to pay tax and NI on the voucher value)

Also note if you are taking the 30 hours or 15 hours, you can still take the childcare vouchers. TFC are becoming misleading on their applications, slightly pushing you to sign up to TFC as well, be aware you don't have to and don't be bullied.


Your vouchers are valid until the September after your child's 15th Birthday, (16 if disabled)

So not just nursery, childminder's or nanny's

You have After school clubs, breakfast clubs, out of school clubs, holiday clubs, activity holidays with PGL / King Camps (quite a few of these companies take vouchers as payments. Also non curricular things like Music Lessons.


So don't forget come April if you havent taken a voucher and your order is showing as expired, you will not be allowed back.

Anyone on Mat/pat leave or about to you can halt your vouchers for one year, give a date to cancel as long as it is before April, then ask for your voucher company to restart your order with you future date, you do have to do it in a 12 month period so March 18 - Feb 19

Mupette

Mumofthreesue wrote: »

I was keen to sign up to Tax Free Childcare as I have three children, but as the youngest two are 5 I cannot yet. I'm keen to know when I can sign up, the MSE website says by the end of the calendar year, and I have registered for e-mail updates, but am frustrated by the lack of information as to when I'll be able to join. Depending on your area Anyone who is eligible should be able to claim by April, it's still in trials in Scotland and Wales


One question I had which has been answered by helpful comments on this thread, is when do I have to stop the vouchers when I do sign up, and I see we have a 3 month grace period, that is useful, haven't seen that information elsewhere. yes you have 3 months voucher run on from the date of TFC sign up


Two other questions - will the voucher scheme continue to run indefinitely, assuming the employer continues with it? Depends on what the employer wants to do but the voucher company i work for has no plans to stop running, potentially we can go for another 15 years from April at the max. I saw a comment about "less than 2 years to run" on this website, but I assume that was for new entrants to enrol, rather than the schemes having to shut down (though presumably they will have to shut down within 16 years as if you signed up in March 2018 with a new-born then you'd no longer be eligible once they turn 16).
Also, is there a time limit on using the funds in the Tax Free Childcare account? And can you use them for children aged 12 and over, even though you have accumulated them for children under 12, if that makes sense? (i.e. when my oldest is 12 can I use funds from my account accumulated because I have 2 other children under 12, to cover her costs?). Thanks.

See comments in red

robertoegg

If for instance I was earning £50,000, but upped my pension contributions through salary sacrifice to bring my earnings down to £45,000 - would I fall into the basic rate tax band for childcare vouchers?

Mupette

even at £45k you will not get £243, it's up to £243, its based around the hours too, there are online calculators so you can see what you could get.

will the pension contributions come out pre or post tax?

rpc

robertoegg wrote: »

If for instance I was earning £50,000, but upped my pension contributions through salary sacrifice to bring my earnings down to £45,000 - would I fall into the basic rate tax band for childcare vouchers?

Your employer will carry out a basic earnings assessment at the start of the tax year - it remains valid for the whole tax year regardless of changes in circumstances.

Pension payments do reduce your income for the purposes of the assessment.

Relief at source and net pay arrangements all count the same, but NB a personal pension (other than a GPP through your employer) doesn't count because it is nothing to do with your employer.

Full details online at https://www.gov.uk/government/publications/employer-supported-childcare