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Childcare vouchers ... can I get a refund?

(27 Posts)
GeorgeEliot Fri 13-Jul-12 15:17:22

Have built up quite a large 'pot' of childcare vouchers through DH's work scheme, and I'm not sure I will be able to spend them all as DS only has one year left at his primary school, and we can't use them at his secondary school (only use them for after-school care 1 or 2 days a week).

What happens to the spare money in the pot - can I get a refund on it?

Not sure about a refund, but would you be able to use it for holiday clubs?

Lizcat Fri 13-Jul-12 15:56:32

Holiday Clubs, PGL holidays to suggest just a couple of ways to use them.

MrAnchovy Fri 13-Jul-12 16:22:08

You can't get a refund because you haven't paid for them - your employer has paid for them and provided them to you as a benefit. One of the conditions that allows them to do this without deducting tax and national insurance is that the vouchers can only be used to purchase approved childcare and cannot be refunded.

In certain circumstances (such as the death of a child), it is usually possible for the whole thing to be unwound and the equivalent amount to be processed through payroll, but this can only be done through your employer, and if they did it regularly simply due to changes of plan it would result in HMRC refusing to allow the employer to offer the scheme.

januarysnowdrop Fri 13-Jul-12 19:26:54

We had an issue with this a couple of years ago and did manage to get a refund. It was a bit of a faff, because they had to go back via my employer to make sure the tax had been deducted, but I don't remember it being particularly difficult or complicated. Contact the vouchers provider and see what they say.

joey99 Fri 13-Jul-12 20:01:57

Can't you pay a friends nursery fees for a month or something and get cash from them if they spend more then their voucher allowance?

MrAnchovy - are you sure? It's salary sacrifice, not employer paying for childcare (or so I thought).

GeorgeEliot Fri 13-Jul-12 20:33:57

It is annoying because the holiday club we use is not registered for the scheme. I suppose I could spend what's left on a PGL holiday for ds...

its salary sacrifice and I have asked this question and they told me they can be refunded via your salary so tax and ni can be deducted in the same way as normal.

MrAnchovy Fri 13-Jul-12 22:39:38

That's what salary sacrifice means - you sacrifice the right to receive part of your salary, and the terms and conditions of your employment change so that you no longer have the right to receive that part of your salary.

If you can simply change your mind and swap back whenever you like, and particularly if you can backdate that change, HMRC may decide (and the courts may back them up as they did in _Heaton v Bell_) that the vouchers are in fact exchangeable for a cash benefit and so ALL the vouchers issued in the scheme become liable for tax and NI.

So do ask your employer, but don't be surprised if they say no.

ZuleikaD Sat 14-Jul-12 06:30:42

No, that isn't what salary sacrifice means! Your employer doesn't pay and it isn't a benefit. The childcare vouchers are simply deducted from your pre-tax salary rather than post tax, so you are still buying them - it's just that the government receives less tax. You can stop or start any month you like, you just have to make sure your HR dept knows.

As far as a refund goes, January is correct - as long as you can make sure that the tax is deducted you should be able to get a refund. So if you've bought a £243 voucher you will get back whatever that is less tax.

MrClaypole Sat 14-Jul-12 07:01:51

My employer has just got some of my cc vouchers back from the voucher provider (saycare). The head of Finance (the dept that deals with the scheme) had to contact saycare and request the money be paid back to my employer. He told me it was a simple process.

BUT this was done because of an error on my employer's part - I had asked to exit the cc voucher scheme and my employer had forgotten to stop the payments. Not sure if they would have done it for any other reason?

HeadsShouldersKneesandToes Sat 14-Jul-12 07:26:32

You can also use them for music lessons and things like that. Or sign him up for a small amount of one of the really expensive holiday clubs with loads of activities that are run at private schools.

If you really don't think you can spend them, I think the idea of paying someone elses fees in exchange for cash would be my favourite.

Italiana Sat 14-Jul-12 07:46:48

I think that some of the suggestions put in this forum are not quite right...

C/vouchers can only be used for 'registered care' and not exchanged for anything else or cashed if an amount has accumulated in the pot.

This is a tax and NI reducing scheme through the Inland Revenue which save parents money each month and helps with childcare costs.

MrAnchovy Sat 14-Jul-12 08:56:09

Italiana some activity holiday providers are registered child are providers exactly for this purpose, although I am not aware of any music lesson providers that are.

ZuleikaD if you are interested in learning more about Childcare Vouchers and Salary Sacrifice HMRC is a good place to start. You will find links to information such as "A salary sacrifice happens when an employee gives up the right to receive part of the cash pay due under his or her contract of employment. Usually the sacrifice is made in return for the employer’s agreement to provide the employee with some form of non-cash benefit."

ZuleikaD Sat 14-Jul-12 09:00:51

:rolleyes: MrA I have worked closely with the HR department at work and I know how it works.

nocake Sat 14-Jul-12 09:03:08

Most childcare voucher providers have a simple process for refunding unused vouchers. You will have to pay tax tax and NI on them. Check your provider's website for details of how to do it, or email them.

MrAnchovy Sat 14-Jul-12 09:33:23

And I have worked closely with HMRC and with a number of employers setting up and administering schemes. I have said all along that the OP should contact their employer because their employer may be ignorant of the consequences of refunding vouchers, but you really shouldn't be making statements about the essence of Salary Sacrifice without some background knowledge of the subject.

GeorgeEliot Sat 14-Jul-12 09:42:15

Thank you all for your very helpful comments and advice.

I will start by contacting the voucher service, then DH's employer. I understand that we will have to pay tax on any refund we might get.

And if that doesn't work, then ds can go on a nice PGL holiday!

MrAnchovy Sat 14-Jul-12 10:19:08

No problem George (love your work by the way grin).

It is interesting to note that the two biggest providers have this to say:

Edenred 29. Can I get a refund for unused vouchers? No, Childcare Vouchers are a non-cash benefit, and may only be used to pay for childcare.

Computershare When your employer signs up to the [Computershare Voucher Services] scheme, they choose whether they will allow any unused Vouchers allocated to their employees to be refunded.

Whilst what Computershare say is true it neatly avoids pointing out that if an employer "chooses to allow" refunds HMRC may pull the plug.

In my experience one of these providers often performs significantly worse than the rest of the market in terms of late payment, dealing with issues etc. See if you can guess which.

he he mr anchovy we use both and over xmas period compushare aka busy bees vouchers were late in payment they blamed our payroll (NHS) and payroll blamed them, we ended up having to pay childminder cash as not her problem and chase up compu share despite them saying payroll fault when I rang them it was sorted within 6hrs!! (if it was my payroll fault let me assure you it would have taken weeks to sort!)

Italiana Sat 14-Jul-12 16:56:24

Yes Mr Anchovy I did say 'registered care' so holiday schemes come in too!

SoldeInvierno Sun 15-Jul-12 17:28:58

I was offered a refund a few years ago (Accor vouchers) when my HR department made a mistake and ended up paying £1900 instead of £190 worth of vouchers into my account. That money had come out of my salary, so it was huge. In the end, I didn't need the refund and just kept the vouchers to cover many years of childcare, but they did offer.

MrAnchovy Sun 15-Jul-12 17:33:38

my HR department made a mistake and ended up paying £1900 instead of £190 worth of vouchers into my account

Presumably you only got the tax/NI relief on the £190 worth though?

longjane Sun 15-Jul-12 17:36:10

what about using ofsted reg nanny or childminder to baby sit?

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