+ All Categories
Transcript
Page 1: Child Care Vouchers

UnderstandingChild Care Voucherswith Green & Peter

Page 2: Child Care Vouchers

What are Child Care Vouchers?

Child care vouchers are vouches from your employer that can save many parents with children aged up to 15 over £1,000 a year on childcare.

With child care vouchers you pay for child care out of your PRE-TAX and National Insurance income.

Page 3: Child Care Vouchers

How Does it Work?

Some employers may simply give you the vouchers on top of your normal salary, but most will ask you to do a 'salary sacrifice', which, if you're on basic-rate tax, works something like this…

You give up £1,000 of salary... ...but after tax & NI that's only worth around £700 in your pocket. In return, you get

£1,000 of vouchers... ...so you're £300 better off.

Page 4: Child Care Vouchers

How Many Vouchers Can You Buy?

Basic-rate taxpayers can pay for up to £243 of child care with vouchers each month. This is PER PARENT, so two working parents could get £486 of vouchers each month.

The limits from April 2014 are:Basic (20%) taxpayer: £55/week voucher, max annual tax saving £930.Higher (40%) taxpayer: £28/week voucher, max annual tax saving £630.Top rate (45%) taxpayer: £25/week voucher, max annual tax saving £590.

The number of children you have doesn't affect the limits.

Vouchers last a long time but are non-refundable. You can save vouchers for a period when you know your child care cost will be higher, for example, summer holidays but be careful not to collect more than you can use.

Page 5: Child Care Vouchers

What Counts as Child Care?

The vouchers cover child care up to 1 September after your child's 15th birthday (their 16th birthday if they are disabled).

The provider must be regulated. Vouchers can be used by any registered and regulated nursery, playgroup, nanny, child-minder or au pair.

You can also use child care vouchers for tuition for your child - as the tutor is providing 'child care' at the same time as the tuition.

A relative looking after a child in the child's own home won't be eligible to receive the vouchers. Yet vouchers can be claimed for carers that are registered child-minders looking after a child in their own home.

Page 6: Child Care Vouchers

Further Help With Child Care Costs

There are other schemes in place to help with child care costs, including tax credits, holiday provision, and at least 15 hours' free child care each week (to be spread over at least three days) for all three and four-year-olds before they reach school starting age (term-time only).

Page 7: Child Care Vouchers

Where to Get Vouchers From?

Any parent, or those with parental responsibility for a child living with them, is eligible for the vouchers. Yet sadly, to get them, your employer must run a scheme.

Ask your employer if it runs a childcare voucher scheme.Check with your HR department. If you're a sole trader, you're not eligible as you're not classed as an employer.

What if your employer doesn't offer a scheme?Providing childcare vouchers shouldn't cost your employer any money as they don't pay National Insurance on the vouchers, it actually reduces their costs significantly! So try to persuade them.

Page 8: Child Care Vouchers

How can an employer begin a scheme?

Firms can either operate the scheme themselves or use one of the many voucher companies to do all the admin for them. The fee for this should be less than the firm gains in national insurance, so they'll still profit.These providers include: Kiddivouchers (which donates at least 5% of all profits to various charities) and Employers For Childcare (a not-for-profit organisation). Many of these companies will also contact your employer if you ask them to.

Can my childless friend get vouchers for me through his work scheme?

You can only get childcare vouchers if you are the child’s parent or guardian. You'll sign a declaration stating you understand this when you apply for the childcare vouchers scheme.So you're not allowed to get your childless friend to enter his employer's scheme and buy the vouchers off him. It breaches the voucher scheme's terms and conditions, and HMRC regards it as potential tax evasion.

Page 9: Child Care Vouchers

Child Care Tax Credit: How do Vouchers Affect it?

While many people can save by using vouchers, they do come with two warnings

• They may reduce your pay • They can affect other benefits

If you need to sacrifice some of your salary to get vouchers, this can have an impact on other elements of your finances that depend on how much you earn - such as pension contributions, maternity pay and more.

This is only likely to be a minor issue for most and easily overcome by the gain from vouchers, but it's worth being aware of.

Page 10: Child Care Vouchers

The Impact on Childcare Tax Credits

Tax Credits are a type of benefit and in many cases it can be a very significant amount. The average pay-out is about £60 a week - over £3,000 a year.

For many people with children, getting childcare vouchers reduces your eligibility for tax credits, potentially leaving you out of pocket because the amount of tax credit you get depends on how much you pay IN CASH (ie, not vouchers) for childcare. Here’s a simplified example...

The Joneses are entitled to 70% of their childcare costs in tax credits. Pay £100 in cash a week - they get £70 of tax credits. Pay £50 in cash and £50 in vouchers (which they had to buy) and they’re only entitled to 70% of £50 paid in cash, which is £35 of tax credits.

This means using childcare vouchers can reduce your tax credits, which means some people are better off not getting vouchers at all.

Page 11: Child Care Vouchers

Should you go for childcare vouchers or not?

If you're eligible for tax credits for then you're likely to be better off sticking with ONLY tax credits and not getting vouchers.

There are a few circumstances in which you could still gain getting vouchers. For example, if your childcare costs are above £175 a week for one child or £300 for two or more children.

If you can't claim tax credits, then you'll ALWAYS be better off using vouchers to pay for childcare.

Use the special childcare voucher calculator on the HMRC site which will calculate if you're better or worse off taking the vouchers.

Page 12: Child Care Vouchers

How will childcare vouchers change in 2015?

A new scheme, Tax-Free Childcare, will replace the existing voucher scheme in autumn 2015. If you're already on the current scheme, you can stay on it until your child reaches 15 (providing you don't move jobs). But, unlike childcare vouchers, it will be open to all qualifying parents, not just people whose employer offers the scheme.

Tax-Free Childcare will be open to single parents and couples who work 8+ hours a week (including self-employed) and who pay for Ofsted-registered childcare for a child under the age of 12 (or 16 if the child is disabled).

Under Tax-Free Childcare, eligible families will get 20% of their yearly childcare costs paid for by the Government. This could mean up to £2,000 per child (the scheme assumes a maximum of £10,000/year childcare costs per child).

Page 13: Child Care Vouchers

Useful Numbers & WebsitesSearch for your nearest Family Information Service on the Daycare Trust website, which should be able to tell you about what's available in your area - daycaretrust.org.uk

The HMRC website has a useful leaflet on Child Care Vouchers - www.hmrc.gov.uk/leaflets/ir115.pdf

Plus you can check on these official websites:In England.Go to the Ofsted website - www.ofsted.gov.ukor call 0300 123 1231

In Wales.Check the Care and Social Services Inspectorate website - cssiw.org.uk

In Scotland.Go to the Care Inspectorate website - www.scswis.comor call 0845 600 9527

In Northern Ireland.Check the Department of Health, Social Services and Public Safety website - www.nidirect.gov.ukor call 028 9052 0500

Page 14: Child Care Vouchers

All information has been taken from Money Saving Expert www.moneysavingexpert.com/family/childcare-vouchers

We hope this information has helped you further understand Child Care Vouchers.

For all accounting needs please feel free to contact us

Green & Peter Call: 020 8446 8100Email: [email protected]: Green & Peter

The Limes1339 High RoadWhetstoneN20 9HR


Top Related