Childcare Vouchers have been deducted from my SMP.

(81 Posts)
ChunkysMum Wed 18-Jul-12 12:56:43

DD was born in November, our benefit selections are yearly and take effect from January.

At the 'roadshow' that explains about our benefits before selection I asked about childcare vouchers and whether you could save them up and was told they'd be valid until the child's 15th birthday.

I was unsure whether I'd be eligible for childcare vouchers whilst on maternity leave but, as far as I could see when selecting my benefits, I met all of the criteria, so I selected them.

They sent me the information about my childcare vouchers so I thought I must have been eligible. I've used some of them.

I've looked at my payslips today (I know I should have done this sooner) and they're deducted the £243 every month since January from my SMP for childcare vouchers.

Should this have happened? Can they decide that I'm actually not eligible for childcare vouchers and ask for them all back if I ask for the SMP back?

What should I do?

Fuchzia Wed 18-Jul-12 14:27:39

Should add that I'm hapPy with this arrangement but wondering if they've got it right!

spammertime Wed 18-Jul-12 14:31:44

Just to confirm, employers cannot deduct from smp

Here is a (very long, very dull) document from HMRC confirming that point:

www.hmrc.gov.uk/employers/sml-salary-sacrifice.pdf

See page 5 in particular

Lougle Wed 18-Jul-12 14:35:06

Ok, you met the requirements ("have child") before you started the vouchers.

Your employers are wrong.

-You should not have any deductions from SMP, by law.
-You should continue to get contractual benefits during Maternity Leave, by law.

You can look the information up on the HMRC website, or you can call ACAS..but what you need to do overall is contact your payroll department and alert them to their error.

ChunkysMum Wed 18-Jul-12 14:40:48

Right, I've emailed payroll.

Fingers crossed that they decide to pay me all of the SMP.

Lougle Wed 18-Jul-12 14:45:18

No fingers crossed about it! They have to.

mamababa Wed 18-Jul-12 14:48:07

I was told that I had to be paid mine and they are a non-cash benefit and cannot be deducted from SMP. The HMRC website confirms this smile

CinnabarRed Wed 18-Jul-12 17:16:39

The one other thing to check is that they have actually (incorrectly) taken the deduction from SMP. If you have other cash payments to you then the CCV deduction could be taken out of those.

Some employers pay more than the statutory amount of SMP (IFKWIM), but show the element that's SMP as a separate line on the payslip.

ChunkysMum Thu 19-Jul-12 14:25:09

They have got back to me.

They're going to check the law on deducting from SMP but say that, even if they don't deduct from smp, they will not make up the difference.

Apparently it becomes sort of a rolling debt that they'll take off my wages when I return or I'll owe them it if I don't return. Is this right?

RedKites Thu 19-Jul-12 14:44:26

The 'occasional misunderstanding' at the top of page 22 in the hmrc doc spammertime linked to implies they are not allowed to hold the debt against you. Could you send them a link to that document? The only grey area I can (in my very amateur opinion) see is that this wasn't actually a benefit you were receiving when you went on maternity leave - but then they let you select the benefit, so I would have thought they are bound by that?

CinnabarRed Thu 19-Jul-12 15:25:02

But she was receiving the benefit while on maternity leave - the CCVs were (are) racking up in her CCV account, ready to use as and when she wants to spend them on qualifying childcare.

I think it's their problem not yours, but I'd defer to spammertime for better information. It might depend what was in the employee communication for your particular scheme. (And even if it is their problem, there's a separate question about how much you want to rock the boat.)

Lougle Tue 24-Jul-12 06:39:12

They will make up the difference because that's the law! If they regard it as a rolling debt, then they are simply deferring the deduction from your SMP!!

TheDoctrineOfSnatch Wed 25-Jul-12 08:01:55

I agree with Lougle. A lot of employers seem confused about this, though.

If the benefit you'd chosen in December was gym membership, they wouldn't have been able to charge you the monthly fee for that out of SMP either.

GoingforGoingforGOLD Wed 25-Jul-12 08:16:40

Lurking as I'm in a similar predicament with my employer

We've reached stalemate with them insistent that I'll have to repay the ccv I've received whilst on smp once I get back to work

Interestingly they've just changed provider (of the scheme) and the new agreement includes a clause that provision of ccv will stop when an employee is on smp or sick pay or any other time earnings drop below the min wage

The agreement I'd initially signed didn't include this clause. They grudgingly paid ccv whilst I was on smp, after I bombarded them with evidence that it was their duty to. Now they say the benefit they provide is the opportunity to purchase vouchers. Not the vouchers themselves

TheDoctrineOfSnatch Wed 25-Jul-12 08:39:04

Gold, do you mind saying which provider it is (the new one)?

I am surprised at that.

GoingforGoingforGOLD Wed 25-Jul-12 09:17:32

Fedeliti

And I'm put out about it because the choice is agree or no longer get vouchers.

I'll not ever be on smp again but I think it's crap for my colleagues, especially anyone on sick pay and I feel responsible.

GoingforGoingforGOLD Wed 25-Jul-12 09:24:01

I think it'll become more common, having to agree to opt out of the scheme to avoid employers having to cover the cost as it becomes more well known that employers should be paying ccv to people on smp

It's a loophole really isn't it? One bit of legislation about the provision of non cash benefits and another about deduction from statutory payments. The ccv whilst on smp is a grey bit where these two cross.
It seems too good to be true and I wouldn't be surprised if this way
of closing the loophole becomes the norm

spammertime Wed 25-Jul-12 13:02:25

No!

They absolutely cannot do that as it goes against the whole principle of salary sacrifice. You are absolutely NOT paying for vouchers, and they are in danger of scuppering their salary sacrifice agreement (and therefore having to pay back a potentially large amount of employer's NIC.

Your agreement says you are going to receive a lower "base salary" and a sum of childcare vouchers rather than a higher base salary.

Yes they may effectively lose out when some employees go on mat leave (and someone with knowledge could abuse the system if they know the rules). But do remember they aren't just offering such schemes out of the goodness of their hearts. They are making savings too.

flowery Wed 25-Jul-12 13:30:56

GoingforGold it's not as easy as that - an employer can't contract out of their legal obligations regardless of what a third party provider says. If it were possible to put terms in an employment contract saying this or that legal obligation doesn't apply to us, it would happen a lot!

GoingforGoingforGOLD Thu 26-Jul-12 10:44:16

Really?
I am v pissed off about it because it seemed that we are being asked to opt out of something that is our right

I'd love to fight it, but I've gone as far as I can. I've presented them with all the legislation. I've spoken to ACAS, short of taking them to court I don't think there's anything else I can do.

GoingforGoingforGOLD Thu 26-Jul-12 10:47:37

And on a bit of a tangent (sorry op I'm hijacking a bit) so whilst I've been on smp has my employer been paying NIC for me?

And therefore if I did have to repay the ccv would those NIC be affected?

prh47bridge Thu 26-Jul-12 11:49:26

Yes, SMP is subject to tax and NI. However, after the first 6 weeks you are only entitled to £135.45 per week which is below the NI threshold.

SMP for the first 6 weeks is 90% of earnings. As you have given up some of your salary to get CCVs, the amount you got for those 6 weeks should have been reduced a little. For example, if you earned £350 per week but gave up £50 per week to get CCVs, your SMP for the first 6 weeks should have been 90% of £300, i.e. £270 per week. If your SMP for those weeks was more than the relevant thresholds you should have paid tax and NI on that.

However, that isn't what spammertime is referring to. You have sacrificed part of your salary for CCVs. As a result the amount of tax and NI paid by both yourself and your employer are reduced. Overall you and your employer benefit because there is no tax or NI on the CCVs (assuming the value of the CCVs is below the exemption limit). However, this only works if you have genuinely sacrificed your salary.

If your employer insists on reclaiming the CCVs from you HMRC will say that this is not a salary sacrifice scheme and that you are in fact paying for the CCVs from your salary. They will certainly say that if they hear what your employer is saying (probably without understanding the consequences) when they say the benefit is the opportunity to buy CCVs, not the CCVs themselves. If the benefit is just the opportunity to buy CCVs it is completely worthless. Sticking to the figures I gave above, you would be taxed and pay NICs on £350 per week, your employer would have to pay NICs on £350 per week and your SMP for the first 6 weeks would be £315 per week. You would be paying £50 from your taxed pay to get £50-worth of vouchers. Pointless.

Refer your employer to this guidance document from HMRC. Refer them particularly to page 11 where it says, "the employer cannot compel the employee to opt out of receiving the benefit." Refer them also to section 2, particularly the top of page 13.

If they refuse to budge you don't have to take them to court. Refer the matter to the Disputes Team at HMRC. You have 6 months to register the dispute from the date when your employer said you have to repay the CCV. Ring 0845 302 1479.

Ellypoo Thu 26-Jul-12 11:55:09

Just one note re prh47bridge's post above:

The first 6 weeks of ML is paid at 90% of normal salary - this is actually part of SMP and so therefore the CCV cannot be deducted from it, just as it cannot be deducted from the government set rate.

prh47bridge Thu 26-Jul-12 12:57:26

Yes, so in my example you get £270 per week PLUS £50 worth of CCVs.

The whole point is that your salary has been reduced from (in my example) £350 per week to £300 per week. Your rights to return to £350 per week are limited - if you can change back at any time it is not a salary sacrifice and you will be taxed on the full £350 per week. Once you have sacrificed some of your salary, your benefits, tax, NI, pension, etc. are calculated on the reduced salary (£300 per week in my example). You also have a non-cash benefit (the CCVs) which the employer must continue to provide whilst you are on SMP. This is all set out in the document to which I linked.

This also has a section on common mistakes, one of which is to calculate SMP as if there had been no salary sacrifice (using my example again, as if the employee was still earning £350 per week).

GoingforGoingforGOLD Thu 26-Jul-12 13:36:33

This is great info. Thank you

I'm going to have to reignite our 'debate'

I'd kind of run out of steam to fight it but it's left a very sour taste. I only claim £120 a month so it's a pretty small sum in the big scheme of things

ChunkysMum Tue 31-Jul-12 15:36:04

Last week they got back to me to explain that the CCVs were deducted from my SMP due to an administration error so I can chose to be reimbursed the money and then have to pay it back out of my wages when I return to work, or we can just leave it as it is.

They also stated that I can chose to opt out of the CCV scheme when my SMP runs out, to avoid a large bill when I get back.

I emailed back quoting the big HMRC document and giving them the link to it (again).

They emailed me today to say they're looking into it further and should get back to me by the end of the week - is this good news?

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