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childcare vouchers-don't understand(10 Posts)
I'm feeling stupid but I do not understand how these kiddi/childcare vouchers work. I've been in the website and it doesn't make it any clearer.
Please can someone explain to me simply how they work?
All I have so far is that if you join the scheme then you don't receive some of your salary (currently pregnant with my first) so when I get my SMP and OMP then it is a bit less but somehow this means you get more to pay for childcare?
Do I sign up now, or once I have returned to work?
I hope to return to work 3 days a week and am currently full time. So I will need childcare for 2/3 days a week as may DH may be able to do a day. So how do I know how much salary to sacrifice.
Also, I don't have childcare organised yet (due in March) and don't know if i'll use a nursery/private childcare so how am I meant to know if they even accept the kiddi vouchers.
I have to hand in my paperwork to my employer and there is a section about the childcare voucher scheme so I need to know what to do.
Childcare Vouchers are a salary sacrifice scheme which is provided by your employer. Not all employers provide the scheme and not all employees are eligible (such as due to low earnings).
What happens about getting childcare vouchers whilst you are on maternity leave is something you need to find out from your employer.
As you do not currently have any requirement for childcare, your employer may not let you sign up now. For now, find out as much information about the scheme that your employer provides and the rules of that scheme.
Once you are back at work it could certainly be something to sign up for, as you may get more of a saving than via other schemes, such as Tax-Free Childcare (which starts sometime in 2017). You could have a play with the GovUK childcare calculator to see which scheme is best given your families circumstances. www.gov.uk/childcare-calculator
How do I know how much salary to sacrifice
You sacrifice the value of the vouchers. Work out your childcare cost. If your childcare cost was £8000 a year, then you would want to get the maximum about of vouchers (£243 per month). You save the Income Tax and National Insurance that would have been charged on that amount had it been paid to you as salary. If your DH can also get voucher from his employer, then you could both make savings. How much you save depends on your circumstances: www.kiddivouchers.com/calculator.php
When you contact childcare providers, ask them if they accept childcare vouchers from KiddiVouchers. If DH can get childcare vouchers and his employer uses a voucher company, then find out which one so you can check that your childcare provider already accepts those vouchers.
Childminders, Nurseries and some Nannies can accept payment via childcare vouchers and will already be registered with various voucher companies and may be willing to register with others.
I think you may have been provided with the information as part of the "pregnancy / maternity leave / childcare" bundle rather than on the basis that you need to sign up to the scheme already!
I don't think (but you need to check your firm's policy) that you can sign up to the scheme before your 1st child (and therefore get the vouchers as part of your first maternity package).
You'll get details of the costs of childcare from the nursery / childminder before you agree your back to work arrangements, and so can tell work. You'll probably sacrifice the maximum anyway because the maximum is very low and 2/3 days per week is going to cost in excess of the maximum you can sacrifice. You and your husband can both do it if his firm also offers the scheme - then you'd get £243 x 2 (on the basis you're both standard rate tax payers).
One thing to watch out for - lots of companies then use your "new" salary (i.e. what your salary is after the sacrifice) for other benefits - so for me, any redundancy / death in service etc was based on my lower salary. It will also affect future periods of maternity leave (I know that seems a very long way away) but its worth knowing!
One thing to also be aware of is, the salary sacrifice will come out of one months pay, but may not be ready to use until the end of that month and nursery's usually want paying in advance. I.e I had the salary sacrifice (childcare voucher £243) come off of my pay on 31/10/16, the voucher was ready to use around 20/11/16 so I had to use it to pay the nursery fees due on 1/12/16. So you may find that you are a bit short the first month as the money will come out of your wages but you can't use it immediately and will still have to pay the fees upfront for the first month. Don't know if it's different with other voucher schemes or nurseries but that's what I found x
Great advice from previous PPs re how it works. In my & DHs companies we cannot purchase the childcare vouchers until we are putting DC into nursery. Therefore I'll return to work late March and we won't be able to begin purchasing until our April salaries
Can you start collecting the vouchers before you go back to work? Therefore have them ready to use the first month?
Some employers will let you do that ivy (mine does), but usually they want you to have a need for childcare.
PP have covered how it works, but my one top tip is to be aware that if you have another child you may need to come out of the scheme as they calculate your maternity pay based on your lower salary (i.e. with your childcare vouchers taken off) so it will affect how much maternity pay you get. I didn't realise this so had to hurridly leave the scheme before they calculated my future mat pay!
You can use the scheme with any Ofsted registered childcare. Just ask when you are ringing around most nurseries and child-minders will take them.
Payment to the provider takes 3 to 4 working days from the day you set to release the voucher so if you get paid on the 30th and release your voucher they will not get it into their account for around 3 to 4 workings days
The short version is you don't pay tax on the salary you recruvecas vouchers rather than cash.
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