Tax Credit & Busy Bees vouchers

[MPearl]

is it possible to claim both; does anyone know? when I rang both helplines, they did not seem too sure themselves.

Yup - I do - one has no effect on the other - they're totally seperate benefits

yes you can.

The inland revenue website says that claiming childcare vouchers MAY reduce the amount of tax credits you are entitled to.

It also suggests you check out the effect on your entitlement to pensions & benefits as well as your future right to the previous cash salary.

Its not easy to find info on the IR site; here's a couple of pages:
Voucher/Credits interaction
Salary Sacrifice

Any childcare costs you pay with the Busy Bees vouchers have to be disregarded when you state your childcare costs for working out tax credits, but the amount you receive in vouchers doesn't count as income either. If you're getting the childcare part of tax credits you may not be any better off by having the vouchers.

If you try putting the example figures with reduced salary and reduced childcare costs into the IR calculator you will probably find that the difference in tax credits almost exactly matches the tax saving on the vouchers.

Not always though - if you are in a family with one 40% tax payer, and one lower income earner, or your total childcare is above the threshold (£300/week I think?), or one or two other special cases it might still be worth you having the vouchers.

It depends on whether you're getting the childcare element of the tax credit - otherwise it doesn't make a difference as the childcare costs don't come into what your actual tax credit is only the childcare element. As for pension schemes it depends - my pension is still based on my gross annual before the salary sacrifice and most voucher schemes work on a basis where you sign up for a minimum period and can come out after that time. The time where its important to consider not doing it is maternity leave as it obviously affects payments etc.

ok, thanks for all your contributions; living in Loondon, I will be paying well over £400 per week (for 3 days per week), so it sounds like i will benifit; i am going to heck those websites now...