Nursery Vouchers

plumpmouse

Hi

At the moment my Mother looks after my little boy 2 days a week while I work, However it looks as if this may have to change as it is likely my Mum is going to have to return to full time work.

What exactly are nusery vouchers and how do they work.

I know I can get them as i work for the NHS but don't understand if they have an advantage over just paying nursery fees

Thanks

Spendless

My husbands employer offers these and we use them to reduce our daughters nursery costs.

You can salary sacrifice upto £50 a week in return for same amount in childcare vouchers. The money that you've sacrficed is exempt from tax and NI.

If Mr Plumpmouses employer also offers these you can both salary sacrifice for the same child.

Woby_Tide

our company is introducing these next month..woohoo...finally. From the basic stuff I've read they seem to be pretty much like 'cash' as far as the nursery is concerned(the only downside seems to be calculating how much you need for the year as our company makes yous elect in 6 month blocks how much you want each month. When the nuresry closes for xmas/easter we eveidently need less vouchers but I guess I can cope with that issue by averaging out over the year). As for the actual 'benefit' it took me a while to get my head round it so I did some basic calculations to show how it worked for me.

Fictitious example:

Say you earn £24k per year, each month you take home £2000. You can claim a maximum of £217 of vouchers(i.e. £50x52wks divided by 12 months)

Pre vouchers:
If you're childcare costs were £250 per month, currently from your £2000 salary you would get £1495 after tax and NI(using calculator at http://www.e-gismos.com/ukpay.asp for purpose of example). After paying your childcare costs you'd have £1245 left.

Post vouchers:
Now if you were to 'sacrifice' £217 each month of your salary, your monthly salary would instead be £1783, after tax and NI you'd receive £1350.18. Take off the extra £33 of your fictional nursery costs and you have £1317 left. So in essence you have £72 more than paying for the costs out of your normal take home pay without the vouchers. (On most people the savings are about 33% on the first £217). if both of you can take advantage it's very effective, also if one of you is a higher level tax payer the savings are even greater.

brummiebabe

I also work for the NHS and used to use 'Busy Bees' childcare vouchers, purchased with my salary, prior to being taxed - hence the saving! I know the scheme has changed since ? April & don't really understand new one! However, if going to use them, I'd look into how it might affect your Tax Credits award, as you claim for childcare fees through this aswell - don't know whether this is claiming twice?? Our childcare co-ordinator didn't know either - so I stopped using them! Didn't want to mess with the awful tax credit dept!!!!

Woby_Tide

The tax credits bit pretty much depends on individual circumstances. if you are on the family element only of CTC or less I think it is better to take vouchers, otherwise it's better to stick with tax credits(I think). this page has some info

http://www.childcarevouchers.co.uk/parent/childtaxcredits/index.asp

plumpmouse

Ok thanks for all the help so far, but I've now got another question

What is the childcare care element of the tax credits and who is entitled to them??

Spendless

plumpmouse wrote:

Ok thanks for all the help so far, but I've now got another question

What is the childcare care element of the tax credits and who is entitled to them??

It's help via the tax credit system with childcare costs. To qualify you both need to be working at least 16 hours or more. It depends on your income and amount of childcare as to what help you'll get, but it can pay upto 70% of costs. Your childcare provider will need to be ofsted registered. Put your details in here to see if you are entitled to any help https://www.entitledto.com

plumpmouse

Thanks Spendless your a star

Alleycat

From what I gather, you are only entitled to claim the childcare element if you are on Working Tax Credit. We just get Child Tax Credit and so can't make a claim for childcare.

We've just started using Busy Bees vouchers and the change since April is that they are now NI exempt as well as Tax exempt, so *I think* in effect you are saving around 24% rather than 11%.

I've had fun and games working out how much the vouchers need to be as I am paid 4 weekly and nursery will only accept payment calendar monthly. What I have done is to get the calendar monthly amount 4 weekly and then will have a 'free' month in March, yippee!!

Spendless

Alleycat wrote:

From what I gather, you are only entitled to claim the childcare element if you are on Working Tax Credit. We just get Child Tax Credit and so can't make a claim for childcare.

We've just started using Busy Bees vouchers and the change since April is that they are now NI exempt as well as Tax exempt, so *I think* in effect you are saving around 24% rather than 11%.

I've had fun and games working out how much the vouchers need to be as I am paid 4 weekly and nursery will only accept payment calendar monthly. What I have done is to get the calendar monthly amount 4 weekly and then will have a 'free' month in March, yippee!!

Did you try putting ypur details into https://www.entitledto.com. You can receive childcare costs on quite a high salary but it depends on how high those costs are and sometimes shows as an additional amount on CTC. Eg I just messed about with a fictional person on £30,000. Without childcare costs they'd only get the family element of £547.50 when I said they had childcare costs of £150 a week they were entitled to more IYSWIM.

I'm not totally sure but I think the vouchers are worth more than 24% I think it's 33% and more for a higher rate tax payer, but if someone could clarify I'd be grateful.

Alleycat

I've just checked on the website you mentioned and we don't get even close to £30,000 (though our childcare costs are less at £58 per week) and are not entitled to the childcare element. It says that as we are not entitled to working tax credits we are therefore not entitled to assistance with childcare costs. Pants, I got quite excited there!