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Can someone explain childcare vouchers and maternity pay in words of one syllable please?

(11 Posts)
BlameItOnTheBogey Tue 30-Jun-09 10:52:42

I'm sorry to ask a dull question but I really don't get what the new rules are on childcare vouchers being deducted from maternity pay/SMP.

I have a very generous maternity package (6 months fully pay, 3 months SMP). Am due to start mat leave in December. Am I right in thinking that my 6 months full pay will actually be full pay based on the reduced amount I get for childcare vouchers (meaning that if I intend to keep DS In nursery for a few days a week, I'll have to up the amount I pay nursery as the vouchers will either stop or my salary will reduce further to pay for them)? Does that make any sense? During SMP, am I right that I get SMP plus the voucher?

Am so confused about this.....

flowerybeanbag Tue 30-Jun-09 12:07:58

SMP is calculated based on your average earnings during an 8 week period. Your actual earnings, not what you would have earned had you not sacrificed some of your salary. If your employer pays you more than SMP it's up to them but I think it's unlikely they'd effectively increase your salary when you are on maternity leave so I imagine 'full pay' would be the same 'full pay' as you receive now.

Deductions for salary sacrifice schemes like childcare vouchers cannot be made from SMP.

However at present your employer is obliged to continue providing you with the vouchers despite the fact that they cannot deduct from your SMP to pay for them.

CheerfulSoul Tue 30-Jun-09 13:21:26

I have the same query and confusion! Ds starts nursery in a couple of months and I return to work. However, I'm hoping to go back pregnant! So do I start taking childcare vouchers now, and reduce the amount of maternity pay I get, or do I just wait and get vouchers for both children when I return to work next time?

Will the savings I make on tax and NI whilst I'm back at work not make the sacrifice of some maternity pay worth it?

And I'm very interested about what you say flowerybeanbag about getting vouchers whilst on SMP. Do you mean that for 6 months of my second maternity leave whilst I get SMP I will get vouchers essentially for free?

All this relies on me getting pregnant again of course! grin

flowerybeanbag Tue 30-Jun-09 13:27:14

The position is that childcare vouchers are seen as a contractual benefit, even though effectively they are being 'bought' by the employee by sacrificing some salary.

Because of sex discrimination legislation, women on maternity leave are now entitled to all their contractual benefits for the whole duration of their maternity leave, including childcare vouchers.

However, separate legislation about maternity pay means that the deductions for childcare vouchers cannot be made from SMP.

So the position at the moment is that if you are already receiving childcare vouchers you will continue to do so throughout your maternity leave despite the fact that your employer can't make deductions to pay for them from your SMP.

Understandably, lots of employers are now considering withdrawing the scheme because of this anomaly, so I understand the government are looking at it. But at the moment that is the case.

CheerfulSoul Tue 30-Jun-09 13:39:08

Wow. In that case I'll be quids in! wink

CheerfulSoul Tue 30-Jun-09 13:44:50

Hang on though, this isn't what someone else is describing www.mumsnet.com/Talk/2310/781729??

BlameItOnTheBogey Tue 30-Jun-09 13:57:24

Thanks for all the replies. But I'm still confused. When I receive 6 months full pay - will that mean I will still get my childcare vouchers and the same take home pay at the end of the month? Or will it be reduced by the amount of the childcare vouchers and then i will need to buy them again? I can't explain my question very well.....

flowerybeanbag Tue 30-Jun-09 14:20:28

Cheerfulsoul nothing on that other thread contradicts what's on this thread... The OP on that thread was concerned about how SMP would be worked out - she thought SMP would be based on her previous full time salary, ie not taking into account the salary sacrifice. She then realised she was wrong and the adjusted salary is what's used, as I've said here.

Blameitonthebogey you'll have to ask your employer. As I've said, they must continue to provide you with childcare vouchers regardless. They are not allowed to deduct for them from SMP.

I can't see any technical reason why they couldn't deduct from any additional pay they elect to give you over and above SMP but that is their decision.

BlameItOnTheBogey Tue 30-Jun-09 14:23:57

OK thanks for taking the time to reply Flowery.

flowerybeanbag Tue 30-Jun-09 15:42:00

[[http://www.hmrc.gov.uk/employers/sml-salary-sacrifice.pdf This is handy guidance, mentions that deductions for salary sacrifice can be made from occupational maternity pay.

flowerybeanbag Tue 30-Jun-09 15:42:28

sorry

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