Maternity Leave and childcare vouchers

[Neeerly3]

Hi all

I am due to go on Mat leave in january of next year. I am currently in the childcare voucher scheme at work and so is my husband. We claim the maximum amount, £243 each.

My HR friend/colleague says that I could be better off coming out of the scheme before I go on mat leave as my mat pay it determined on my taxable pay in weeks 17 - 25 of pregs.

I have worked out I would get approx £100 less take home salary if I stay in the scheme but obviously I will still have the £243 in vouchers that I pay the nursery (my dt's age 4 at the time will still be at nursery). If I opt out, I will get as I say £100 more take home BUT will still owe nursery the £243 I would have got in vouchers iyswim.....

I think I am better staying in the scheme - any ideas?

bump

Hi

Most schemes will not allow you to continue to be a member whilst you're on mat leave. They are salary sacrifice schemes and depending on your company's mat pay policy, you probably will receive SMP and not salary. You might be allowed to stay in if (and whilst) you get company enhanced pay

In your calculations though remebre you are only gaining by the tax element on the 243. So if you are a higher rate tax payer you save 40 percent on the 243. If you are basic rate you save 20 per cent. The 243 comes off the top of your salary but you pay it out of non taxed income not taxed income.

Fishnet thanks - I will be getting half pay + smp for 12 weeks, so can still claim these vouchers.

My calculations are that x = my untaxed income, so for 12 weeks I will be getting:

x/2 = y

y will then be taxed (I am a lower rate tax payer), so an approx figure is 30% to include NI as well

so y*30% = z

so my take home will be z + 451 smp per month

IF I stay in the scheme:

x is still my untaxed income, so

x-243 (vouchers) = a

a/2 = b

b will be taxed *30% = c

so my take home would be c + 451 smp a month

c is £100 LESS than z

you need to talk to the finance people at your firm as it depends on what extra benefits they offer you as well as SMP

i think i am better off in the scheme personally as i still need to pay for my DT's childcare while i am on mat leave

many companies base the non SMP bit on the salary before the salary sacrifice so your entitlement to mat pay does not change but again you need to talk to the finance people

thanks witch - i believe my company base it on salary after any sacrifices - hence there was a lot of umming and ahhing before they brought this benefit in. Also affects your pension as your pensionable pay is effectively less....