Does anyone understand the new childcare scheme due to be introduced in the autumn?

[dodi1978]

Hi,

I was wondering whether anyone understands this new scheme that is due to be introduced in the autumn.

www.moneysavingexpert.com/news/family/2014/03/new-tax-free-childcare-scheme-boosted-to-2000-per-child

At the moment, I am paying all my childcare costs (£1100 per month for a full time place for one DS) via salary sacrifice. I am able to do this as I am using my workplace nursery. The entire costs are directly docked from my pay and save tax and NI. This amounts to a saving of between £300 and £400, so more that we'd save if I or my husband used a childcare voucher scheme.

Now, with this new scheme coming in, do you think I might be able to combine the benefits of full salary sacrifice and the government contribution? It'd be great if this was the case... but details are extremely sparse!

Any ideas would be highly welcome!

My instinct is that this wouldn't work, for a couple of reasons:

1. You are currently saving the tax and NI on the monthly cost of the nursery. In other words, you get tax relief on the fees. The new scheme coming in gives tax relief on fees / costs. If you've already received the tax relief via your payslip, there's nothing further left of your childcare costs to relieve from tax.

2. The new scheme does not involve your employer in any way. You have an account (nothing to do with work, more like a bank account), that you pay into. For every 80p you put in, the government puts in 20p. You then use this account to pay for childcare. If your childcare is already paid for (taken via your payslip), and you used the new scheme as well, then you would theoretically have this money sitting in your 'childcare account' but it wouldn't be any use to you, as your childcare is already paid in full via salary sacrifice.

I'm not an expert on this new scheme, but these two issues were what popped into my head when I read your post. Sorry it's not more positive, and please don't take this as gospel, it's just my thoughts!

Sorry, I completely forgot about this thread! Thanks, vinoandbrie, for your answer!

My thought was that, if my employer paid into that bank account on my behalf (via salary sacrifice), the benefits from both schemes could maybe be combined....

I live in hope, but not trying to get my hopes up too much...

I believe that they've confirmed that you can't combine the two schemes.

When the new rules are introduced you have two options:

1. Continue to purchase and use the childcare vouchers
2. Switch to use tax free childcare. As explained by the previous poster - the tax free childcare doesn't involve your employer at all.

The Tax Free option may save you more money if you spend a large amount (over £600 per month I believe) on childcare. It may also be more beneficial if you and/or your husband are taxed at the higher rate.

If you are basic tax payers the vouchers might still be more cost effective.

There's a really good website (including a calculator) which you can access here to find out which option works best for you:

www.tax-free-childcare.info/resources/options-between-now-and-autumn-2015/#parents

Just read this which says scheme is now delayed. www.gov.uk/government/news/government-confirms-tax-free-childcare-launch-date-as-it-welcomes-judgment-from-supreme-court

bump

Early 2017! Cheers Gideon.

Doesn't surprise me as there's been little publicity and no information on how to set up accounts.

They've kept the news of the delay very quiet too. I only found out about it on mumsnet. rubbish.