Childcare vouchers/tax credits

carpool72

Hello, here's a warning for you. I recently signed up for the salary sacrifice scheme which allows you to receive £50 per week of your salary as childcare vouchers free of tax & NICS contributions. What a great idea I thought. However, the info we were given didn't mention that it could affect your working tax credit if you're eligible for the childcare element (might seem obvious but when you're head's full of stuff like how to stretch £5 to cover 3 days meals you don't necessarily make the connection). On my calculations it looks like the £40 per month saving on tax & NICS might be significantly less than the tax credits I'll lose. Just a quick heads up for anyone else thinking about the voucher scheme - you can get more info at the worksmart website (sorry can't remember the address - head too full of other stuff!)

irs101

Yes, this has been mentioned a couple of times on this board.

However you shouldn't have lost out much - the worst that can happen is that the benefit from the vouchers is almost exactly wiped out by the loss in tax credits. What you probably haven't taken into account is that you can now report a lower income for tax credit purposes (because you have sacrificed some of your salary).

Only other possible way you can lose out is if you need to maximise your salary figure for mortgage or pension purposes.

irs