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Childcare vouchers / Mat leave - Please could someone clarify something (sorry - I know it's been done before!)

(25 Posts)
MrsKitty Wed 05-Aug-09 02:45:33

Hi,

I would really appreciate if someone could clarify the deal with childcare vouchers whilst on maternity leave for me with respect to my personal situation?

I know this has no doubt been done to death, but I just cannot get my head around it. I've read through flowerybeanbag's earlier link to HMRC guidelines but I'm having a completely thick moment and need someone to "Plain-English" it for me please (I've been on night shifts for 5 nights & am 32 weeks pregnant so brain in a total mess!)

Here is my situation re: materity pay:

- I currently salary sacrifice £55 per week for CC vouchers

- I intend to take 12 months maternity leave

- My company will pay me the following:
6 months *FULL PAY* (a policy for which I will be eternally grateful)
3 months *STATUTORY PAY*
3 months *NO PAY*

DS will be continuing at Nursery whilst I am on leave so we will still be using the vouchers.

I was told by payroll when I enquired previously to leave the scheme 5 months into my maternity leave to avoid losing SMP on salary sacrifice but now from what I've seen here I don't think that's right - is it?

Do they have to continue to give me vouchers on top of the SMP I will receive in weeks 26-39? What about when I'm on zero pay - do I need to leave the scheme then? I really don't understand how it all works.

Apologies for long & rambling post, but if someone can just tell me exactly what I will get and if and when I need to leave the scheme I would be extremely grateful...

Thanks in advance.

gigglewitch Wed 05-Aug-09 03:09:39

I was also advised to - and did - cancel our vouchers for the length of my mat leave so that it didn't affect my smp, though that is 3 yrs ago and things may have changed a bit since then... I reinstated it as soon as I got back to work after my mat leave finished. IIRC, if you continue to salary sacrifice when you are on mat leave then you won't get the right amount of SMP. Employer schemes (mine does 6mo full pay too) basically work by topping up from your smp to your own full pay amount. Dropping the scheme from the minute my mat leave started worked for me smile

flowerybeanbag Wed 05-Aug-09 09:04:57

Yes as a rule SMP will be lower if you keep up the salary sacrifice scheme, as your salary is lower. SMP is calculated on average salary during weeks 17-25 of your pregnancy, so if you stop the childcare vouchers scheme by that time, and go to a higher salary as a result, your SMP (and presumably the full pay element of your maternity pay as well) will be higher.

However you will have to do some calculations about your own personal situation to see how you would be better off.

If you stay in the scheme:

Deductions for salary sacrifice schemes cannot be made from SMP, or indeed during unpaid maternity leave. So if you take 12 months off, for 6 of those, your employer will not be able to make deductions but will still have to give you vouchers. So you'll be getting 6 months of free vouchers effectively.

However your 'full pay' will be calculated on your current salary. SMP in your case will probably stay the same though, unless you are particularly low paid. Assuming you earn over about £120 a week, it's only the first 6 weeks of SMP that will vary depending on your salary, the rest is at a basic flat rate. As you will be getting full pay during the first 6 weeks anyway, it will probably make no difference what your salary is for SMP calculations, you will be getting the basic minimum for the 3 months you are receiving SMP.

If you leave the scheme:

You will get more 'full pay'.
So you need to work out what your salary will be if you leave the scheme, how much you will lose by doing so while you are still at work, versus how much you will gain by getting 6 months of free vouchers at the end of your maternity leave.

carrielou2007 Wed 05-Aug-09 11:11:17

I was also wondering this as have read on here that employer still issuses the vouchers.

My employers just give the minimum first 6 weeks 90% then STM. So does that mean I get my £120odd a week and also get the childcare vouchers? Dd will be starting playgroup soon and I wondered if I could use the childcare vouchers to top up the few hours free she will get when she turns 3 to book a half or full day. (sorry to hijack OP)

Ceebee74 Wed 05-Aug-09 11:36:30

Flowerybeanbag has summarised it perfectly.

In your situation you need to weigh up what is financially better off.

a) Full pay (I.e. without any salary sacrificed for childcare vouchers) for 6 months and no childcare vouchers for 12 months OR
b) 6 months of pay with £55 per week deducted from it but with 6 months of 'free' childcare vouchers (which would be worth £1458.

But, I am a little confused as you would have had to leave the scheme before week 17 of your pg and you are already 31 weeks - so what did you do? If you did leave the scheme to ensure your maternity pay was not affected, then afaik, you cannot now rejoin the scheme to get the 'free' vouchers whilts on mat leave.

MrsBadger Wed 05-Aug-09 11:50:58

I have a slightly different but very much related question so I might hijack quickly blush:

My matleave pay scheme is exactly the same as MrsKitty's (6m full pay, 3m stat, 3m no pay)

At the moment I salary-sacrifice in the region of £600pcm from my gross pay for the full cost of my nursery fees (no need for vouchers because it's a 'workplace nursery').

For the 6m I am on full pay this is still fine
But when my pay drops to stat (at the £123.06pw flat rate) it will be less than the £600pcm nursery costs.

What might happen? I am desperate not to leave the nursery as dd then has to go to the bottom of the the waiting list and (tbh) will never get back in, but I can't work out if you can opt out of salary sacrifice but stay in nursery, and then opt back in to SS later.

No-one has given me a straight answer yet angry. Any ideas?

Ceebee74 Wed 05-Aug-09 13:45:21

MrsBadger afaik, your situation is exactly the same as anyone else's.

As you are obviously aware, there was a loophole in the childcare voucher scheme which means that parent's whose DC go to workplace nurseries can sacrifice the full cost of the fees, rather than the maximum of £243 pcm that other parent's sacrifice - but it is still technically the same scheme.

The amount of salary sacrifice is irrelevant - any benefit, such as childcare vouchers, are classed as a benefit which would be discriminatory if it was denied to you whilst you were on maternity leave.

So, in your situation, during the first 6 months of your mat leave - you would still sacrifice £600pcm as normal. Once you move into SMP only, no deductions can be made from this but you are still entitled to receive the childcare fees you were receiving previously - so basically your employer will have to give you £600pcm.

I remember when the legislation first came out last year and my organisation was trying to figure out the implications of it - they were discussing a case where an employee already had twins in a workplace nursery and was pg again - and it was going to cost the organisation over £1000 per month!

I have been on mat leave myself since last October so things may have changed but I am fairly certain they have not.

Do you have a HR department who you can go to with this information?

MrsBadger Wed 05-Aug-09 14:04:22

I do, but they keep telling me that my first point of contact is meant to be the 'childcare coordinator' whose phone has gone straight to voicemail for the last month hmm.

If my employers abide by this I am going to be considerably better off than I thought I would be for those 3m at stat - might even mean I can take the whole year!

thank you smile

Ceebee74 Wed 05-Aug-09 14:09:18

I know - the last 3 months of my maternity leave haven't be as much of a financial struggle as we were expecting because of this (and I only got the basic £243 per month paid to me[ wink)

Your employers have no choice to abide by this otherwise you can claim sexual discrimination against them - it is not a choice that they have!!

MrsBadger Wed 05-Aug-09 14:19:18

but but

the benefits they give me are surely:
a) a workplace nursery - so they can't ask dd to leave when I am on matleave
b) not having to pay tax or NI on my nursery fees - so I thought they'd be justified in asking me to pay £450ish pcm (ie what that my net salary goes down by) while I'm on stat.

flowerybeanbag Wed 05-Aug-09 15:11:35

MrsBadger I haven't got time now to look at your situation or think properly, but have you had a look at the HMRC guidance on mat leave and salary sacrifice? It gives detailed guidance including some examples. If you look at the other thread in Employment currently running on this, ('employer charging 3%...'), I've linked to the HMRC guidance there. Have a look if you haven't already, it's very good.

MrsBadger Wed 05-Aug-09 15:17:19

bonza, will do, thanks flowery

lou031205 Wed 05-Aug-09 15:30:22

MrsBadger, no. You get a workplace nursery place. You then had a choice, in effect:

a) Salary (x)
or
b) Salary (x-£600) + £600 nursery fees.

By choosing option b, you save the NI&tax, but that is not the 'benefit'. The 'benefit' is the £600 fee, even if you never actually receive a voucher for it.

MrsBadger Wed 05-Aug-09 15:54:21

yes yes, have now read hmrc doc, you are quite right, I hadn't taken into account (or known about blush) last year's rule change.

I love the 'Occasional Misunderstandings' paras, well expressed.

Also spoken to childcare coordinator (at last) and to HR.

The former is a doddery old dear who had no clue and said I'd have to pay the £600pcm to my employer who will then pay the nursery.

The latter seemed more switched on and are getting back to me.

big kisses to you lot, we will be going on holiday next year after all

[dance of joy]

MrsKitty Wed 05-Aug-09 23:54:21

Thank you so much mrsflowerybeanbag for your help - Clearly I am too late to leave the scheme for it to make a difference to SMP now anyway, being 32 wks PG, but I think I'm better off this way anyway grin

Am somewhat concerned that when I spoke to the CC vouchers co-ordinator person in Payroll she mentioned none of this, and also gave me duff information in saying that I would have to leave the scheme a week before I ran out of full pay to retain my SMP hmm

Last time I was on mat leave I received a payslip every month (even when on zero pay) I assume this time it should now show full pay/smp or zero pay but also show £220 (i'm paid 4 wkly) childcare vouchers?

What if they attempt to not give me the vouchers once on SMP/Zero - what would I need to do? (Not that I don't trust my employer wink)

flowerybeanbag Thu 06-Aug-09 09:13:23

If your payslip normally shows your childcare vouchers, then yes you should continue to get one showing that.

If your employers won't give you the vouchers, don't hold it against them immediately; they may not know they have to. Give them the HMRC guidance on the other thread and ask them to contact HMRC directly if they are not sure.

pecanpie Thu 06-Aug-09 11:31:27

I still find this whole issue exceptionally confusing. Can someone confirm this is correct if I continued to take childcare vouchers throughout pregnancy?

First 6 weeks - 90% of salary after salary sacrifice. Still get childcare vouchers.
SMP - £123 per week plus childcare vouchers. No salary sacrifice.
No pay at 9-12 months - still get childcare vouchers

Thanks

MrsBadger Thu 06-Aug-09 13:12:37

sounds right pecan

MrsKitty Thu 06-Aug-09 13:49:56

Thanks again FBB - really appreciate your help.

flowerybeanbag Thu 06-Aug-09 14:10:00

No problem MrsKitty, and yes, pecan, that's correct. Deductions can't be made from SMP, and benefits including vouchers must continue to be provided throughout the 12 months of mat leave.

pecanpie Wed 19-Aug-09 11:01:47

Hi FBB - thanks for all of the info on this... Spoken to HR and they seem to be completely unaware that vouchers get provided in addition - they seem to think that they can be deducted from SMP. Is the info you've posted absolute law and is there any information I can show her?

MrsKitty Wed 19-Aug-09 11:06:26

Pecanpie see here - I plan to print and give this to my payroll department should I come up against any issues when the time comes!

pecanpie Wed 19-Aug-09 11:22:24

thanks for this. I will pass it onto HR. My preg brain can't deal with all of that information - hopefully it will make 100% sense to HR!!

pregnantpeppa Thu 20-Aug-09 18:57:26

This is such a helpful thread.

My employer actually have previously emailed me the link earlier in the thread which explains childcare vouchers can't be deducted from SMP in answer to a different query (would they reduce my OMP to take account of salary sacrifice), yet in a meeting today, suggested I would want to cancel my childcare vouchers during the period I was on SMP (after 20 weeks) as otherwise I would only get SMP less my childcare vouchers which wouldn't leave me with much money! I may need to suggest they read their own link again, otherwise they are being VERY sneaky by suggesting that!!

carrielou2007 Fri 21-Aug-09 22:19:57

Someone on another thread has raised another point, I get a car allowance insted of a company car, of which I still get paid during the 26 weeks of OML. Can the childcare vouchers be decucted from this i.e. SMP plus car allowance less vouchers?? It seems I'm doomed to use the last of my savings whilst on mat leave after all sad

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