how do childcare vouchers work?

[Booyhoo]

i have never used them before and the CM i have chosen to look after my boys is newly registered and has never used them either.

my OH's employer uses them. how do we apply for them? how much will they be worth? are they paid to us or the CM? do they affect our tax credits?

if anybody can help me out it would be great. TIA

Your OH can elect to receive vouchers up to £243 a month from his employer, which will take the form of a salary sacrifice - ie it will be deducted direct from his wages - before tax (and no tax or NI is paid on that amount). Your CM has to register with the Childcare voucher provider - Accor and BusyBees are a couple I know of, and provide to them proof that she/he is a qualified childcarer.

Usually the money goes direct from your employer into a voucher account (held by the provider in your name). You can then log on, and pay your childcare provider from the vouchers. Schemes vary a little, but that's how mine work. Some vouchers expire after a certain amount of time, but others don't.

I don't know anything about tax credits I'm afraid. hth

thanks cossete, it does help. so does OH's employer decide which voucher scheme to use or can my childminder just register with any one and we let employer know?

The voucher comes as part of your pay but may be processed at a different time. You then provide it to the CM - sometimes this can be done electronically, other times it is a paper voucher. It then takes more time to clear into the CM's bank account. So save up at least one voucher ahead so that you can be sure it has cleared sufficiently and can be given to your CM sufficiently in advance for it to clear by the time your invoice is due. Sounds complex but really means using say January voucher to pay February Invoice (if invoiced in arrears) or March Invoice (if invoiced in advance).

The voucher is still considered income so will affect Tax Credits in the same way I think.
HMRC: Childcare Vouchers or Tax Credits is worth a visit as the calculator may be able to show if you will be better off taking the vouchers, or not.

does OH's employer decide which voucher scheme to use or can my childminder just register with any one and we let employer know?

It is your OH's employer who decides upon the Voucher provider. Some may do it in-house, others will contract it out to a large, or small voucher company.

Your OH should contact the relevant person at work (probably in the HR or Finance Dept) to enquire about the Childcare Voucher scheme and with luck will be given information about how it will affect things like Pension, any company Bonus scheme, which voucher company is being used (if not doing it in-house), any conditions there may be, plus how to apply.

thanks nannynick.

he is speaking to his salary office tomorrow to apply for it.

is there any way of knowing how much employer will pay before applying so that we can determine whether it will be more beneficial to use it or not?

Not sure what you mean by Employer Will Pay.
Childcare Vouchers are a salary sacrifice scheme, so it comes out of your OH's existing pay. Max monthly amount is £243.

STOP

Definately, absolutely use the link nannynick gave before your DH asks his employer for childcare vouchers: if you are getting tax credits you may well be better off getting the childcare element of tax credit instead.

The links from that page will tell you if you are eligible for childcare element of tax credit, and whether you will be better off with it or vouchers.

sorry, i should have phrased that better. i mean, is there any way of knowing how much of OH's salary will be used for the vouchers?

e.g; our childcare costs will be £150 per week for 2 children. working out at about £600 per month. so will his employer take the full £243 out of his salary for vouchers or will it be a percentage of £243 based on OH's salary?

You set it at whatever amount you wish upto the £243.

thank you, i wasnt aware that we could choose how much salary was used. ok, going to look at that link now. thanks all for replies.