Child care £50 tax free/both parents claim or not?

Petal_3

Forgive me if this has been asked before.

As from 6.4.05 i can claim the first £50 pw of my child care tax free. The notes I received from our accountant said that both parents can claim even if working for the same employer. My partner works for the same company as me....I asked if that meant we could both claim £50 pw tax free but was told No. Today, I attended a presentation on tax free incentives for employees and the accountant doing the presentation says, Yes, both parents can claim £50 each p w for one child. I've asked the two accountants (both from the same firm) to find out the answer.

Does anyone know? It would be soooooo :cool: cos we pay £110 pw and although we're aready saving a ton on tax & NI, we may be able to save DOUBLE!!

Am fairly new to the site, but LOVE it already and could quite easily become addicted :rolleyes: I'm also awaiting delivery of my Money Diet :money:

Thanks....

Spendless

Hi

Yes you can both claim the £50 free of tax and NI even if the childcare is to be used on same child.

HTH

rammy007

how do you go about doing that,do you have to be self-employed?

sneekymum

Spendless wrote:

Hi

Yes you can both claim the £50 free of tax and NI even if the childcare is to be used on same child.

HTH

Doesn't that reduce your childcare costs for tax credit purposes - don't you just lose tax credits pound for pound?

mrcow

sneekymum wrote:

Doesn't that reduce your childcare costs for tax credit purposes - don't you just lose tax credits pound for pound?

.......assuming that they actually receive help with childcare costs through tax credits.

The OP hasn't indicated that they do.

mrcow

rammy007 wrote:

how do you go about doing that,do you have to be self-employed?

No it's not just for the self employed.

It's a new tax break introduced in April 2005. From this date, you are entitled to purchase £50 per week of childcare vouchers which are tax and NI exempt (ie. they would come out of your salary pre deductions).

Enquire with your employer whether they are planning to introduce such a childcare voucher scheme. Many employers are introducing this now, but the tax break only came in this year, so its still quite new.

Petal_3

Thanks all. I do receive child tax credit - just under £9 per month. That didn't occur to me actually....I guess I should call them and let them know change of circumstances.

x

Spendless

Petal wrote:

Thanks all. I do receive child tax credit - just under £9 per month. That didn't occur to me actually....I guess I should call them and let them know change of circumstances.

x

Petal if you only receive £9 a month it won't make any difference as your salary must be too high to qualify for help with childcare via tax credits.

Petal_3

I have to confess :embarassed: that I have ABSOLUTELY NO IDEA how the tax credits are calculated! My partner usually completes the forms and then we seem to get countless bits of paper telling us what they're going to pay...they get put aside to be looked into when we have the time....then they go into a drawer cos we have people coming round so we hide the mess....then they stay in the drawer.....blah blah. All I know is.....if I lose £9 per month...it won't break my heart!

Thanks all

mrcow

Don't be embarrassed..you're ot the only one. Not even the Tax Credits Office seems to know how they get to the figures that they do!

Anyway, as Spendless has stated, if you are only getting £9 per month in total from the tax credits office, then you're not getting any award within the childcare element, so you don't have to worry about advising them of it. Your circumstances won't have actually changed, you're just going to be using your tax and NI allowances more efficiently.

I've been using childcare vouchers (voucher company is Accor) since April 2004 and would just advise you of the following that applies to my situation (therefore may it may not be relevent to you).

1. I have to nominate a set amount of vouchers that I want to purchase per month and am only allowed to change this at the end of the tax year (unless I have a life changing event). Therefore, as I am expecting a baby this month, even though my salary has dropped, I am unable to change the amount of childcare vouchers that I am purchasing until my return to work in January. I therefore had to be very careful when deciding how much of my salary to sacrifice.

2. Any vouchers that I do purchase (I'm saving about 38% off my childcare costs so it's well worth it) expire within a year of purchase.

3. You are unable to cash in vouchers. They must be spent as designed, or you will lose the money.

The moral to the above is that you have to be careful to work out exactly the amount of vouchers that you wish to purchase over the year. Your childcare costs are £100 per week at present, but you need to be aware that if your circumstances are going to change (is one of your children due to start school?) then you may need to take this into account when choosing the level of vouchers to buy.

I hope the above makes sense!

Saying all that, I think that the scheme is great and I have saved a significant amount of money by using it!

katskorner

We have managed to take full advantage of the childcare vouchers scheme. My husband is entitled to buy £217 worth of vouchers pcm and it cost us just above half that. So we save a packet on childcare - about £100 pcm from what I had to find before.