Tax Free Childcare - declaring income
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hellsbells417
Posts: 1 Newbie
First post, looking for advice on tax free childcare.
We currently use the Government tax free childcare scheme, and have two accounts for our kids' nursery fees - so when we pay our fees in there, the government pay 20% in as well, and then the nursery fees go out - all good.
Every quarter, we are asked to confirm that our income is not expected to exceed £100k (per person). The problem with this attestation is that it doesn't state a time frame.
My husband receives an annual bonus that hasn't yet taken him over the £100k limit, but we've just learned that it will this year. Since his base salary is sub £100k we've truthfully declared so far that we're not expected to go over, but the next time we attest (in Feb) we will.
But after that quarter, our expected earnings will be back under £100k, because he's not guaranteed a bonus, so until it's confirmed in December, we can't say it will be over £100k.
Does anyone know how this is accounted for by the tax free childcare scheme? What timeframe is the £100k limit supposed to fall within - is it per tax year, per calendar year, per 12 months rolling? Depending on the timeframe, will depend on when we can attest whether we've hit the limit.
Hope this makes sense...!
We currently use the Government tax free childcare scheme, and have two accounts for our kids' nursery fees - so when we pay our fees in there, the government pay 20% in as well, and then the nursery fees go out - all good.
Every quarter, we are asked to confirm that our income is not expected to exceed £100k (per person). The problem with this attestation is that it doesn't state a time frame.
My husband receives an annual bonus that hasn't yet taken him over the £100k limit, but we've just learned that it will this year. Since his base salary is sub £100k we've truthfully declared so far that we're not expected to go over, but the next time we attest (in Feb) we will.
But after that quarter, our expected earnings will be back under £100k, because he's not guaranteed a bonus, so until it's confirmed in December, we can't say it will be over £100k.
Does anyone know how this is accounted for by the tax free childcare scheme? What timeframe is the £100k limit supposed to fall within - is it per tax year, per calendar year, per 12 months rolling? Depending on the timeframe, will depend on when we can attest whether we've hit the limit.
Hope this makes sense...!
0
Comments
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Could your husband not simply make a pension contribution big enough to get him under the £100k? That way, he gets a bigger pension, avoids the 60% income tax trap and still receives the tax-free child care payments.I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.0
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Exactly what the poster above says. I am in the same position and just make a pension payment to take me under the 100k.
Another reason to do this is when you earn over 100k/year you start to lose your tax free starting rate (£11.5k), it makes it very inefficient to earn just above 100k (up to about 125k).0
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