Firstly, I think it is important that you know that the childcare voucher scheme is ending in 2017. Exact date to be confirmed still. When I started looking into childcare vouchers earlier this year they were due to finish this autumn, however the government have had to extend the scheme while they work out details of the new scheme that is replacing it.
The new scheme is called Tax Free Childcare, more details can be found about it here:
http://www.moneysavingexpert.com/family/childcare-vouchers#changes
One important thing I learnt about this change is that some families will be worse off on the new scheme.
On the current, childcare vouchers scheme you can apply for a maximum of £243 per parent per month. Most companies offering childcare vouchers offer it on a salary sacrafice basis and you get tax benefits via the childcare vouchers. To put it as simply as possible: if one parent applies for £230 of childcare vouchers per month (and is on Basic Rate Tax) it gets deducted from their wage, but you only see a £130 difference in your wage due to tax benefits. You save around £100.
These figures aren't exact but are close to the actual figures.
On the new scheme it basically works out as every 80p you put in, the government will give you 20p of childcare. So if you had to pay £230 in childcare per month (like above) the government would pay £46 of that. You would essential pay £184.
I have based these figures on online information and my own requirements and experience with childcare vouchers.
As you can see, in this instance you would be worse of on the new scheme.
If you aren't on basic rate tax then the savings are different. It is worth checking out full details on the MoneySavingExpert website: http://www.moneysavingexpert.com/family/childcare-vouchers#changes
The good news I discovered is that if you get onto the scheme before 2017 you can remain on it until the child is 15 years of age, as long as you remain with the same employer.
In summary, when it comes to the change in 2017, work out which scheme will be best for you. If it is the childcare vouchers scheme make sure you get on it before the new scheme comes into place.
In addition to the above it is worthwhile considering which parent's wage is best to run the voucher scheme by. For instance, when I return to work I will be going back part time and my wage will be lower, to the point that I wont pay much tax (as I will be close the threshold). If I paid for the vouchers out of my wage then we wouldn't see much saving/tax benefit, as I wont be paying enough in tax. However, my husband is on basic rate and earning enough to pay enough tax to make the vouchers worthwhile via his wage.
If your company doesn't currently run the voucher scheme it is worth encouraging them to start doing it. It offers the employer savings on your NI. If your employer is reluctant to do the scheme it is often worth mentioning that they save as well.
When your employer runs the childcare voucher scheme they will use a "supplier", like Kiddicare. Your employer pays this company the amount of childcare vouchers you want every month. This company will then either send you the vouchers or debit an online account with the amount so you can pay your chosen childcare provider.
From what I read the online system can be more beneficial as the "online vouchers" on your account dont have an expiry date, whereas the "paper vouchers" have to be used within a year.
When I say the childcare voucher company, like Kiddicare, debit your online account it isnt like a bank account. You can only use this amount to pay the childcare voucher.
In order to pay your childcare supplier online you will need to get their account number with that specific childcare voucher company.
Lastly, if you are returning to work part time and will be earning less than £10,600 a year you can transfer some of your tax free allowance to your partner (you have to be married I believe). You can register to do this here: https://www.gov.uk/marriage-allowance. I think the saving is around £212 to your partners wage, it may not be thousands, but it all helps. :)
I hope this helps anyone looking into childcare vouchers. This only covers a few points, mainly ones that I came across while exploring childcare costs.
No comments:
Post a Comment