Tax credits and childcare vouchers

woohoo

woohoo wrote: »

Hi again,
I am really confused.......
I have my award notice in front of me. Can you tell me which part of the award will be reduced by claiming vouchers? I have no working tax credit element, less then £2 child care element of WTC and an award of £3800 child tax credit. This is made up of 2 qualifying children and the basic family element of £545? If I claimed vouchers for the whole year how much roughly will I pay back. I didn't claim any vouchers before that.
I never used to receive any award apart from the basic family element until I went on mat leave and that year earnt a small wage. The tax credit then kicked in. In fact, it never occured to me that I could claim anything, I just rang up to give my earnings for the year and got money paid in to my bank! I was convinced it was wrong and rang several times to check it was really mine! No-one ever asked about the vouchers and I never thought to tell them . This year I believe I will get only the basic £545 again. The vouchers do not affect this i presume? As I will not be getting any child care costs.
I just need some idea of how much I have to pay back. Like a previous poster said - I am getting £60 ish a month tax break from the vouchers only and potentially will have a big repayment (although I hope it won't be). I have never reduced my income either to account for the money spent on vouchers??
I just think it would be easier for people if they asked you when you phoned if you get vouchers! This wouldn't have happenned to me then.

Subsoniccoyote (great username by the way!!) can you offer any idea about overpayment amount please? I would be really grateful!

[Deleted User]

If you were only receiving the minimum £545 it wont make any difference and you wont have been overpaid.
To be honest I cant give you an estimate of how much you have been overpaid, it would be quite complicated to work out.
You would be best to just inform TCO as soon as possible to let them work out the overpayment.
If you are just receiving the £545 now, the full amount will be reduced to pay back any overpayment. As I said earlier, make sure to keep completing your annual declarations or the claim will be terminated and you will have to pay the overpayment back directly.

And sorry, I meant to reply earlier but was distracted.

woohoo

Thanks a lot for that. Better do the deed then....
I feel better knowing that they will just stop my award rather than ask for the lot in one go (which I have spent...........). Thanks again. x

noviceanne

Sorry to all of you that now find yourselves in the same situation as me. The guidance really isn't clean and the advisors I have spoken to don't usually know what the childcare vouchers mean.

Can anyone help me with the amount of salary I sacrifice for £243 of vouchers. I am a basic rate tax payer.

Thanks

[Deleted User]

I would guess you are sacrificing £243, the only difference is you pay for them from your salary before you are taxed.

And dont be sorry to those who realised they are in the same situation. It will actually help them in the long run as it will save any compliance investigations on their claims in the future.

Gemmzie

Maybe it's something Martin should give a head's up about on the show / email at some point. Of course then the advisers might be inundated!

caleo

I have been offered these vouchers by my employer, and so has my husband. the nursery we have registered our children with have advise us to apply for them as well.

I have been trying to work out whether i will be better or worse off by using them, but it is a bit of a grey area.

I have just found a calculator, and worked it out, and my husbans and I would be £570 per year WORSE off by using vouchers!!!!!:eek:

http://www.hmrc.gov.uk/calcs/ccin.htm

I really think that people need to be a bit more informed about these schemes before taking them up. I really thought that they would benefit me, because we keep getting told you will save £1000 each annually!

I also found this quote on the HMRC website, which is what made me investigate further:

Will I be better off accepting childcare vouchers in return for a salary sacrifice or by claiming tax credits help towards my childcare costs?
This will depend upon your individual circumstances. Generally speaking, your family will be better off accepting childcare vouchers in return for a salary sacrifice if you can answer “yes” to one of the following:

• Your eligible childcare costs are more than £175 per week if you have one child or £300 per week if you have two or more children. In this case you will always be better off accepting childcare vouchers to cover your childcare costs above these limits.
• You are receiving tax credits at the family element (£545 per year, or £1090 per year if you have a baby aged under one) or less and you are claiming for your childcare costs.

Your family will generally be worse off or, at best, no better off accepting childcare vouchers in return for a salary sacrifice if you can answer “yes” to both of the following:

• You are receiving tax credits of more than £545 per year (or £1090 per year if you have a baby aged under one) and you are claiming for your childcare costs.
• Your eligible childcare costs are no more than £175 per week if you have one child or £300 per week if you have two or more children.

I hope this info helps some of you.

Caleo