Paying childminder in vouchers?

[FessaEst]

DD is starting with a CM very soon. I have agreed to pay her via the work voucher scheme, however, when i rang payroll to set it up, they said I needed to check whether I would be better off doing it via tax credits . Is there a rule of thumb with this or do I need to do complicated sums?

Childcare vouchers are a benefit offered by some employers to enable their employees to take advantage of the dispensation wherby the value of them is deducted from your pre-tax income. Not all companies offer them - even some of the big ones!

However, tax credits are a statutory entitlement depending upon your household income and other financial circumstances and presumably you would claim those first if you are entitled. HMRC's website has a ready-reckoner to work out your likely eligibility. Suggest you go there first.

Thanks Millenium. I have been on to the HMRC's website and nearly fried my brain - it needs all sorts of detail that I don't really know for sure until I get back to work!

I get tax credits already but clearly they would be affected if I got the vouchers. i just want someone to tell me what to do!! Think I will ring payroll back and confess my cluelessless!

One test I think is:

If you deduct £243 from your monthly pay... does the remaining pay still make your salary above National Minimum Wage?

This test is due to the vouchers being a salary sacrifice scheme, thus you can't get them if your resulting salary (the salary minus the vouchers) leaves you with less than National Minimum Wage.

Thanks Nanny - is that monthly salary pre or post tax? The calculator did come up with a warning that my salary had dropped below the minimum wage but I had put in really rough figures so still not sure

Monthly, Pre all deductions (so before tax/ni).

Have you worked out if you would qualify for Childcare Element of Working Tax Credit?

Thanks Nanny - I think I put in earnings post tax/NI/pension, so should be ok.

Not sure about the tax credits, maybe I should give them a ring. I work in the public sector and am not terribly paid (not rolling in riches either) so shouldn't think I am the most deserving case, although I have been unpaid for a lot of this tax year so that will impact.

Gah, why is it so hard!!

Would Benefits Search do you a basic calculation? Maybe useful to get an idea.

if you decide to get childcare vouchers, I think this reduces your nominal childcare costs so you get less from tax credits. There's an interaction between the two, and I'm not 100% clear on the details.

This should tell you which you're better off with:

www.hmrc.gov.uk/calcs/ccin.htm

(If not, google it).

I have been trying to work out what to do myself. You are right FessaEst - why is it so hard!!!!!!!!!!!!!!!!!!!!!!!!!

Thanks token and Nanny think I am going to sit down with all my old payslips etc and work it out.

Ah, thanks lula that's really useful to know. I was thinking that as most of my colleagues use the voucher scheme, it is likely to be the best course of action for me as we are roughly in the same bracket income-wise. Just realised that my tax credit eligibility is going to plummet as I start earning again and DD turns 1 so think the vouchers are probably the best bet.

Good luck slippers!