childcare vouchers get NI and tax relief

edited 30 November -1 at 1:00AM in Marriage, Relationships & Families
9 replies 1.2K views
jellyheadjellyhead Forumite
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i don't know if this has been mentioned anywhere else, it's in an email i got from the motley fool http://www.fool.co.uk/news/comment/2004/c041116d.htm

if you can buy childcare vouchers off your employer you don't have to pay NI on them, the good news is that from april you also won't have to pay any tax if you buy £50 or more per week:

"Nevertheless, next tax year, many working families are expected to benefit from an improvement to the taxation of childcare vouchers, which around one in five firms (20%) currently offer to their staff. At the moment, you do not have to pay 11% NICs on childcare vouchers, so £89 of take-home pay can be turned into vouchers worth £100.

The good news is that, from next April, the government will also give income tax relief on the first £50 of vouchers bought each week. For basic-rate taxpayers, this relief is worth an extra £11 a week, or £572 a year. Higher-rate taxpayers (about a tenth of the workforce) stand to gain an extra £20 a week, or £1,040 a year.

Overall, giving up £2,600 of your annual salary in return for £2,600 of childcare vouchers (known as 'salary sacrifice') would mean an annual gain of £858 for basic-rate taxpayers, or £1,326 for highly paid workers. What's more, your employer doesn't have to pay NICs on this sum too, which helps to support its admin costs."

i doubt that my employer will provide them, but it might be worth looking into for any of you who spend £50 or more on childcare :-)
shaz
52% tight

Replies

  • Murphy_The_CatMurphy_The_Cat Forumite
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    Another thing about this scheme is that it applies per person, not per child.

    If you only have 1 child and you are both working (assuming that there are 2 of you) you can claim £100 per week, then you are onto a winner.

    But if you are on your own and have 3 children, you can only claim £50 through the scheme and you may feel that you have missed out.

    There is always winners and losers, but i think that the £50 scheme is a good start.

    MTC


  • nodwahnodwah Forumite
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    I first read about this scheme in a newspaper and I have been trying to get something sorted out with my employer ( an NHS trust) without success. Does anyone out there actually use this and if so how did you get it started? Where can I get any official literature about it? ???
    Just call me Nodwah the thread killer
  • jellyheadjellyhead Forumite
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    no idea sorry, i don't know anyone who gets them! they say one in 5 firms use them but i don't know of any :-( are they produced by accor? (the same people who make luncheon vouchers)
    52% tight
  • The vouchers are produced by accor and their site http://www.childcarevouchers.co.uk/childcarevouchers0/parent0/helpwithchildcare/index.asp features an NHS case study so some trusts must use them.

    It's also worth mentioning that a lot of private junior and infant schools take these vouchers as payment towards fees. Even if they currently don't use the scheme if you ask they might set it up for you as it is quite simple to do.

    Hope that helps :)
  • debs_3debs_3 Forumite
    21 Posts
    I work for a local council and they have recently introduced the use of these vouchers, the company we use is called Busy Bees. Their website is http://www.busybees.com/ It all looks good and my husband is trying to get his company to use them too.

    i have no links with this company but if you can get money off your tax then go for it, what will it cost you??? Nothing.
  • I work for a major bank (don't hold it against me!!) and they are starting to take the work/life balance a bit more seriously now that flexible working rights are in place.  I am pleased that they are offering childcare vouchers. They are a real steal and I calculate I will be better off by about £1,000 !! Fan Bloody Tastic.  

    Here is my worked example to illustrate how it works:  I currently pay £450 a month to a childcare nursery for my 2 boys.  My firm are offering a discount of 10% on the full value of my childcare costs and i also receive reduced National Insurance contibutions at 11%.  I suffer an increased benifit-in-kind tax of £11.  Therefore my total monthly saving is £45+£49.50-11=83.50.  This is £1,002 per year. ; :D( it will pay for our summer holiday).

    Please note, as a result of new legislation being introduced by the Government on the treatment of tax and NI, those eligible as approved carers will change in April 2005.  At the moment even a family member can be used as a childcare provider but this loophole will be no longer available after April.  Only approved carers will be eligible to participate from then.

    The NI benifits are rediced to 1% for higher rate tax payers.


    My company uses a firm called care-4 (https://www.care-4.com) .  

    Badger your directors for this very nice flexible benifit.  It is definately worth it.

    I would be very intersted to hear form anyone currently using these schemes on any negative aspects as I am just seeing the potential benifits at the moment.  I have signed up to join as of January.

    Happy Hunting :)
    No reliance should be placed on the above.
  • crankupcrankup Forumite
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    My employer also provides them and I now purchase them to cover our daughter's 2 days a week at nursery.

    It only saves me about a tenner I guess, but better than giving it to the government. They are also easy to deal with.
    I pay electronically once a month - simpler than writing a cheque :)
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  • SpendlessSpendless Forumite
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    Bump :)
  • Had no problems so far with busy bees, really good!
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