childcare vouchers refund

andrewf75

Not sure if this is the correct section...
Due to a change in our circumstances we are taking our son out of his current nursery. Due to the lockdown we had built up credit from our tax free childcare vouchers and the nursery has said they will refund this to us directly. Obviously this is great from our point of view, but it doesn't seem right. Can anyone clarify? Is it then our legal obligation to pay tax on the money? 
Thanks!

JGB1955

Are they refunding you money or vouchers?

andrewf75

They are refunding money

andrewf75

I guess I'll just take the money and run without asking any questions....

Icequeen1

andrewf75 said:

Not sure if this is the correct section...
Due to a change in our circumstances we are taking our son out of his current nursery. Due to the lockdown we had built up credit from our tax free childcare vouchers and the nursery has said they will refund this to us directly. Obviously this is great from our point of view, but it doesn't seem right. Can anyone clarify? Is it then our legal obligation to pay tax on the money? 
Thanks!

So you were paying your nursery in advance? You can only use money from TFC accounts to pay for actual childcare - i am struggling to understand how you have built up a credit. I think you may have to pay the Government top-up back. 

andrewf75

During lockdown our voucher payments to the nursery continued for a couple of months, but we obviously didn't pay for any childcare as the nursery was closed. 

Icequeen1

andrewf75 said:

During lockdown our voucher payments to the nursery continued for a couple of months, but we obviously didn't pay for any childcare as the nursery was closed. 

Are these payments out of an online tax free childcare account or are you on the childcare voucher scheme via your employer? If it is the tax free childcare scheme, i don't understand how that could happen as you would have gone into your childcare account and made the payments. If that is the case, then if HMRC find out you will owe them back the top-up payments on the amounts. If it is childcare vouchers then there may be tax and NI issues to sort out. 

andrewf75

We both have voucher schemes via our employers. It works by direct debit with two stages one the voucher to the nursery and then the childcare payment with vouchers plus topup. So i think while they stopped charging us childcare, the vouchers kept going to the nursery. It does seem odd but the nursery suggested the refund as the way to resolve it so we are only following their advice. Guess we got lucky...

sheramber

So the nursery will be using the vouchers to claim  for childcare that they didn't give, while giving you the money 
You got tax and NIC  relief on the money to buy the  vouchers and are due to have that  deducted from any repayment.
 The nursery should refund the vouchers to your company who then Pay it to you less tax andNIC.

andrewf75

Does sound like they haven't followed the correct procedure,  but that's down to the nursery as I see it. Not going to lose any sleep over it. If somehow HMRC comes back to us ( not sure how) I'll happily repay what we owe, but until then I'll plead ignorance! I'm not going to go to great lengths to try and put something right that isn't my mistake. I've been made redundant have therefore left the voucher scheme anyway.
Thanks!

Teahfc

You asked a question about having to pay Tax on the money, you were told yes you would need to pay Tax and NI on it. You then wash your hands of the responsibility you have to follow the correct system ? Why bother with asking the question in first place if it was your intention not to pay.