Childcare Vouchers, Salary Sacrifice and Personal Allowance

[BartonStacey]

Hello,

I am currently on Maternity Leave from a part-time PAYE job paying £10,000 per annum, and also do some self-employed/freelance work amounting to between £2,500 and £5,000 per annum.

I can get Childcare Vouchers through my employer, but once I have made a salary sacrifice of £243 per month for these as well as a (far too small) pension contribution, I will no longer have enough salary left over to use up my personal allowance.

Does anyone know whether I can use the remainder of my personal allowance for my freelance work to reduce the tax I pay on this? Or is it rather that your Salary Sacrifice is limited to the taxable portion of your PAYE work?

Would be very grateful for any suggestions

Your taxable employment income will be 7,084 less the pension contribution. Then you add your freelance income (net of any expenses) and any other income together. Deduct your personal allowance and tax the balance.

Thank you very much, that sounds like everything I had hoped - for some reason I was afraid that there was a rule about not making a salary sacrifice for Childcare Vouchers greater than the income you would normally be taxed on IYSWIM.

So when I do my annual tax return in January, the unused personal allowance from my PAYE income for the year in question is just included in the calculation and set against my freelance income? (Sorry I know I'm being dim about this, just trying to make sure I understand the logistics with PAYE tax taken monthly and freelance tax paid 9 months after the year in which it's earned.)