HMRC Childcare vouchers or Salary Sacrifice?

Daniel_Moore

Hi all,
I'm in a bit of a quandary at the moment, not really sure what to do for the best.
I work in a school which was local authority up to April this year (2019). We converted to an academy, which is very small, comprising of just 3 schools (ours included).

I have two children, one eligible for the Govt. 30 hours free childcare, and one who is just 13 months, which unfortunately, we have to put into childcare two days a week.

The local authority allowed me to make a salary sacrifice each month so I would benefit from a bit of tax/NI relief and pay for my childcare through Sodexo childcare vouchers, but the new academy wasn't signed up to any form of voucher scheme.

I signed up to the HMRC childcare voucher scheme, was eligible, so now use this. Last week, I was informed that the academy have now started using KiddiVouchers, which is essentially the same as Sodexo, whereby I can sacrifice a portion of my salary each month, as opposed to paying into the Govt. scheme whereby they add money to any amount of cash that I add.

Here are some figures:
I work 5 days a week, 39 weeks of the year. My salary is pro-rata. Before tax my monthly wage is about £1780, and I pay about £260 in tax.NI. This is for 37.5 hrs work a week, so I clear around £1520. My childcare costs £175 a month. With Govt. scheme, they add £2 for every £8 I pay in, so to cover the £175, I pay in about £138-they make the rest up to £175.

My quandary is that I'm now not sure if I would be better off paying into the Govt. Childcare scheme, or, if I would be better going down the route of salary sacrifice. Obviously I want to make my money stretch. Unfortunately, I'm unable to compare finances from my salary sacrifice when I did this with my eldest daughter, as the amount I was paying is different to the amount i'm paying now (I pay less at this time).

Is there a way I can find out which scheme financially would be better? There is a very generic calculator on the KidiVouchers website which once I have input my details, tells me (based on my partners details too, whose earnings are less than mine as she is not only pro-rata, but only works 3 days a week 39 weeks a year-22.5hrs p/w):

Your potential tax and National Insurance savings from childcare vouchers are: £672 a year
Your potential tax savings from tax-free childcare are: £420 a year

I have no idea how to compare these numbers to to the payments I'm making with the HMRC to find out which is better.

If anybody is able to shed any light or can point me in the direction of a website that may be able to help that would be great.

Thank you!
Dan

JRichFleur

I was just looking at this for my Daugher. I hope I can post the link as last time I was unable to.


THIS WAS ON MSE 2017 you should check if this is still the case
https://www.moneysavingexpert.com/news/2017/06/using-tax-free-childcare-little-known-rule-means-top-ups-are-limited-to-500--every-three-months/
[FONT=&quot]TOP UP LIMIT NO MORE THAN £500.00 IN 3 MONTHS[/FONT]
[FONT=&quot]'I had no idea there was a £500 limit – now I have to find more of my own money to pay the bill'[/FONT]


Childcare vouchers reduce your salary and can therefore affect your pension.


Last bit of advice really do your own research and questions you ask of HMRC and employer always get response in writing.
Hope this helps

sheramber

Have you checked if you can switch back to vouchers if you have signed up to the Tax Free Childcare?