How do childcare vouchers work...I am so confused

[Jellybabie3]

My employer offers childcare vouchers, as does my husband, and we want so sign up before the deadline. A quick squiz online days we can both have the standard £243 a month. I just don't get how it works....i understand its pre tax etc so thats how we save but I dont understand the mechanics of what we actually do...

I am going back part time. DH is full time. I will officially go back September but will use leave to get me to November. DS will start having trials with a childminder in October. Childcare will cost around £450 a month.

Do you select each month how many vouchers you want? Or else what happens if we are not paying the childminder for a while or on a reduced amount that month (holidays etc). What happens to over spend of vouchers...

Its so confusing...

Can anyone explain it?

You opt in and select how much you want to pay, it gets deducted from the wage pre tax, so for example if your childcare was £200 a month that would come out pre tax so your wage would be £160 shorter, So that £200 costs you 20% less

You sign up to take up to £243 (each) per month as childcare vouchers. Your employer will use a company to administer the vouchers, which will sit in an account that you operate online. £243 comes out of your salary before it is taxed, so you save tax and NI on it.

You’d pay your childminder with the vouchers and anything left over sits in your account until you spend it.

Just be aware that your salary will effectively be reduced by just under £3k per year, which could affect pension entitlements, maternity pay and mortgage applications.

Forgot to add, it sits in your childcare voucher account and you pay it to the childcare providers, so if your childcare costs less one month it stays in your account to use later

Ah OK so if we rack up abit of money in the account we can potentially not have to put in one month?

So each month we can decide how much to put in?

Its just if your paying a preset amount per month every month how will you use whats left over unless you have a period where you dont pay in...

You can’t change amounts every month, no. You have to choose an amount. You might be able to change it once a year, but not month.

You stop paying in the last but one month you’re going to have a childcare bill.

Also, any left over that builds up in the account can be used when your child starts school, and can be used to pay for breakfast clubs/after school clubs, holiday clubs etc.

I pay a fixed amount into mine each month, it takes a while to alter payments so you can't really adjust each month but if you find you are building up a big balance in your account that you won't use then you can reduce your monthly payments for a while until it gets used up.

You can control how much or little you sacrifice from your salary. The maximum you can sacrifice is £243 if you are a basic rate taxpayer.

So you can both pull £486 per month. Depending on how much you childcare is per month you could accrue additional funds to use at a later date.

The childcare voucher scheme is closing forever.
I think, but I'm not sure, that October this year is the cut off to join. The scheme itself will keep going just no one new can join.
I think it's being replaced with something else that's not quite as good for tax savings.

It is worth doing as you do save a reasonable amount in tax.

If we have additional I use them against summer clubs etc for the kids but it can be difficult to find clubs that accept them.

Hmm OK so we may have to not opt for the full 243. Our monthly bill will be 444 so we will be over purchasing without even taking into consideration breaks or reduced childcare months. We would rack up a lot of spare vouchers too quickly.

As an titty says you can't continually change the amount. So it's the same amount every month that's is taken from your salary.

Yes I didn't use the whole amount as I didn't need it but it was still worth doing. I do take max amount now as I use it for more than one child.

We didn't quite spend the whole amount each but hoped to have more children so used it as a way to save up vouchers to help when we had 2 lots of childcare, it really helped us when DD3 came along, paid her deposit and month in advance which was a big help at the end of maternity pay.

Hmm OK..will have to have a think about what amount we choose.

Can it be any amount up to the max?

Yes any amount up to the max is possible.

Titty my scheme allows me to change the amount we want as often as we like.

We started taking the standard £243 out a few months before I went back to work to build up enough to cover months where out childcare bill was more than our monthly allowance would cover.

Mine has a website, I can change how much to sacrifice, and then I send them to my childcare provider through the website choosing how much to send each month. It’s all very straightforward.

Just ask for 222 each? Instead of the full 243

If you are higher salary earners also be aware that when you hit £50k you are only allowed £143 instead. If one of you are likely to hit this in the near future it’s worth claiming the full £243 each now and building up a surplus! Or if you intend on having a second child so your childcare bill will raise above £486 you will need extra in the pot to avoid paying the extra from your taxed wage.

Titty my scheme allows me to change the amount we want as often as we like.

Most providers won’t do that. It’s a bloody nightmare for payroll.

If you can afford it, take the full amount each month and build up a buffer. You can use them for all sorts of holiday care when they start school etc and if you have any further children you will burn through the vouchers. You will each be saving £933 a year in tax and NI doing this, so nearly £2k in childcare free. Obviously, if you can’t afford to take the full amount, that is different.

You can always request the overspend back, it's not locked into vouchers forever. I saw it as a secret savings stash

Check the details of your provider. I am able to change my voucher amount monthly if I want to, as long as it is before a certain deadline in each month.

I can also change the amount each month. I’m buying a bit more than I need for termtime, and will then use the extras for school hols. If nothing else, it’s nice to have the childcare pot there so I don’t have to find the extra cash for the odd extra before/after school session, it’s there in the voucher account to use.

The voucher scheme closes in October, you need to have ordered vouchers by a certain date. Best to sign up now!

We didn't realise that we could start claiming them before dd started nursery (at 10 months). I'm still not entirely sure if I could have claimed them during maternity leave, but I wish we'd started dh getting them sooner. Also, his he were soooo slow that we actually missed the first month after she started too. Just saying it's worth setting up in advance if possible.

As an aside, does anyone know if/when they expire? Or do they just not? Thinking ahead to after school clubs etc and potential baby number 2 etc. Dd is only 2 at the moment.