Can someone smarter than me please explain childcare vouchers

[Lenl]

According to the basic child tax credit calculator we'd be eligible for around £90 a week child tax credits when I go back to work, if we were paying approx £100 a week for childcare (some grandparent care luckily).

Alternatively I could get £243 a month of childcare vouchers through my employers salary sacrifice scheme, which would apparently make me better off than claiming tax credits.

I don't quite understand how it works. I'm guessing you don't pay tax on the £243 but surely the amount of tax paid on £243 is minimal? I don't pay much tax as it is. I earn about £1050 a month part time.

Would £243 a month be deducted from my salary and then I'd just be taxed on remainder of my taxable income?

I struggle with maths and can't get past £90 a week tax credits basically covering the whole cost of childcare compared to just £243 a month that comes out of my wages anyway. I know I'm missing something

You will get £90 deducted from wages in return for £243 of child care vouchers so basically you are being given £133 for a month

I don't think that's right, you get 243 deducted before the tax is calculated, so you pay less tax than you would have. If you don't earn much and so don't pay much tax, then you don't save as much money as someone who pays a lot of tax.

The 243 is taken before tax etc. I did it because I don't get tax credits and I don't miss the money as it goes straight from my wage. I think I save about 900 in tax

Will you be paying £243 pm on childcare? If not then it is not really useful as you can only spend the childcare vouchers on childcare.

Tax credits can pay up to 70% of your childcare if you are eligible but they work on household income so if you have a partner working you may not get that much.

Childcare vouchers save you paying tax on that portion of your income. Usually approx 20% if you are in the basic rate tax bracket. You and partner can claim them.

You can claim both but if you are paying for nursery with vouchers then you can't claim tax credits on that amount.

Based on what you've said I think tax credits would be better for you but if you have a high earning partner go for vouchers.

Try this online calculator. www.gov.uk/childcare-vouchers-better-off-calculator

£243 is the maximum you can have deducted from your wages

ypu can choose the amount and then you use it to pay your childcare

The voucher system is closing to new applicants and you will be able to sign up for tax free childcare where the government pays a percentage of your fees
It's explained here
www.childcarechoices.gov.uk/

If you can manage to avoid tax credits by taking childcare vouchers from your employer then do so. The paperwork and calculations involved with the tax credits are a nightmare best avoided.

If you have a low wage, you may find that you are not eligible for childcare vouchers because it would reduce your take home pay to less than minimum wage levels. I think the new scheme coming in may be open to lower paid workers though.