Paying for childcare through salary(32 Posts)
Not quite sure where to post this! My colleague and I have both heard of a new system whereby you can pay for childcare (nursery) from your salary before it has tax/NI deducted. I emailed my payroll who didn't seem familiar with the scheme and said we weren't in it. Can someone enlighten me? Is it something that employers should take part in?
It's a voucher scheme. I think more than one agency offers it, but the one my employer is signing up to right now is Accor
You are paid part of your gross salary in vouchers (it can only be a certain percentage) and pass the vouchers to your childcare provider as part-payment for your monthly bill.
Most nurseries are already geared up to accept the vouchers but I am remembering the nightmare Mumsnetter Edam has had with the same chain of nurseries I use...they took her vouchers and her usual monthly payment I think!
So you need to be confident your nursery administrators are not an incompetent shower...
There is apparently NO COST to your employer in signing up for the scheme waswondering.
Is this the one that certain registered nannies can also accept or is it purely nurseries?
Yes, childminders and nannies who register can use these too. I believe!
Hmm. Work have said they aren't going to offer these just yet - but maybe in the future. That's a shame!!
Is there a disadvantage for the employer - does it cost?
(I'm wondering whether we could sign up to this and offer it)
Blu - they have to administer it but they get a savings on the employers NI too and this covers their costs (so I understand).
I've been wondering about doing this but feel instinctively wary - is there any downside to the employee in terms of lowering the 'official' salary they get?
pamina thanks. Yes I'm sure it is the salary sacrifice scheme. I understood it was going to become more generous after April - I think I'd previously worked out I wouldn't gain much.
Don't like the idea of lower pensionable salary though.
WW - I know about this as I'm just sorting out for where I work. You are basically allowed a max of £50 per week ( equates to £217 per month) in vouchers which are Tax and NI free.
Unfortunately not all employers take part in the scheme but remember it can be yours or your dh/dp who can claim them.
It is also upto the childcare provider if they want to take part, again they don't have too.
The new scheme come into affect in April
cranberry is there any information on the web about the new scheme - I think it must have been the inclusion of tax relief not just NI that I picked up on and thought I'd reconsider.
Be involved in the mgt of each nursery?
eeek - where can I find out about this from an employers pespective - I'd like us to offer it (to ME for starters!)
Blu, certainly for the scheme my employer is involved in (Busy Bees) there isn't any involvement in management - you get vouchers exchangeable at any childcare provider that will accept them.
ok, I have read the occor employers info from Marina's link below - it seems v straightforward. Why on earth would any employer not agree to do this?
Will look at Busy bees. too.
This sorry it's a pdf
explains a salary sacrifice scheme extremely well (although this is one about computers rather than childcare).
Key downsides are:
- maternity pay or final salary pension is based on your pay AFTER the salary sacrifice (ie less)
- you have no automatic right to return to your previous salary (so you need to trust your employer not to see it as a convenient cost cut at some point in the future)
There used to be a necessity for the employer to be involved but not post April - and the vouchers can be used for registered carers as well, not just nurseries.
But as others have said, as it is a salary sacrifice scheme, which means a number of benefits which are based on your salary will be affected - as well as pension/maternity, you need to think about any profit share/bonus/share scheme that would be based on your lower basic salary
I use a scheme like this with our workplace nursery. On the maternity pay issue, if you are going to continue to use the childcare through your maternity leave, it might make no difference - it didn't to me. Dd2 continued at the nursery, so I didn't have any financial loss from using the scheme.
In fact our HR person told me that it would be to my benefit if I'd used my maternity leave in a different way. If you have a maternity leave scheme where you get full salary for 3 months and then half your salary say for months 3-6 of leave (as we do here), they calculate the half based on your reduced salary, but the employer is still paying the whole of the nursery cost. So you might end up with relatively better maternity pay.
Oh no - I'm talking about the childcare vouchers scheme. This is a effectively a salary sacrifice scheme as well - well unless you have a very generous employer. I doubt very much that many employers will be handing out an extra £50 a week without making a reduction in your basic salary.
Blu - I've got some info on the scheme my employers use - am happy to send it to you next week when I am back at work if you want.
Prufrock, yes I know it's a different scheme but maybe the employer won't get any choice in this matter, if the reduced salary is your official salary, how would they be allowed to then reduce the childcare part they are paying which is not at that point your official salary
you may be right of course. I described my case even though it's the old workplace scheme rather than this new universal scheme as an example of how it might work. I was concerned about the maternity leave issue and my concerns were unfounded. and my employer is not known for unneccesary generosity.
So: could someone clarify: does the childcare voucher mean I will get a salary reduction? Is it not a benefit?
Fennel - my post was in response to Paminas, not yours. Sorry for the confusion.
Waswondering. As I said, I doubt very much that any employer would be generous enough to give all parents a £50 voucher each week on top of their normal salary - this would equate to a £2,600 annual pay rise.
If your employer wants to take part it is far more likely that they would reduce your basic salary paid into your bank account by £50 and then give you a voucher for £50.
Have a look here for a better explanation of how they work- Busybees is only one of the companies that runs the vouchers scheme.
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