Childcare Vouchers have been deducted from my SMP.

[ChunkysMum]

DD was born in November, our benefit selections are yearly and take effect from January.

At the 'roadshow' that explains about our benefits before selection I asked about childcare vouchers and whether you could save them up and was told they'd be valid until the child's 15th birthday.

I was unsure whether I'd be eligible for childcare vouchers whilst on maternity leave but, as far as I could see when selecting my benefits, I met all of the criteria, so I selected them.

They sent me the information about my childcare vouchers so I thought I must have been eligible. I've used some of them.

I've looked at my payslips today (I know I should have done this sooner) and they're deducted the £243 every month since January from my SMP for childcare vouchers.

Should this have happened? Can they decide that I'm actually not eligible for childcare vouchers and ask for them all back if I ask for the SMP back?

What should I do?

No, as far as I am aware you should be paid childcare vouchers on top of your SMP.

They have got it wrong.

I haven't got time to search, but I think some info might be found here:
www.maternityaction.org.uk/workingparents.html

or try Directgov.

No they cannot deduct from smp

BUT they can deduct from any excess maternity pay they give you. So the bare minimum they can pay you is the smp (about £130 per week).

They also have to keep providing your benefits while you're on mat leave. So if you are on basic smp then they should be paying you that AND the childcare vouchers.

Also beware complicated payslips! My payslip on mat leave looks like they are deducting from smp. However they then "top it up" to get me back to smp.

How much are you getting in your bank account each month?

I'm getting £297.56 per month into my bank account. Stupid question but have they deducted it? I'm only entitiled to SMP but aren't 100% how much that should be after tax etc.

Do you already have an older child who you were claiming vouchers for while you were pregnant?
If not, I'm guessing that the vouchers weren't part of your package during the qualifing period, and so possibly the rules are different.

I was entitled to SMP and vouchers during my maternity, but was claiming them before i fell pregnant for DS1.

Can you find your tax code on there? It will be something like 815L. Also how much are you getting by way of vouchers?

But it's looking incorrect at the moment from what you've said

Nope, not an older child. DD is my only child, that's why I was unsure whether or not a qualified for the vouchers in the first place. The benefits thing just says 'if you have a child' it also says:

'Where employees join the Childcare Voucher scheme on or after 6 April 2011, the company will carry out a Basic Earnings Assessment (BEA), to decide what level of exemption they will be entitled to. The BEA is calculated by adding together your basic earnings and any applicable allowances plus any taxable benefits that you receive from the Company. Subsequently, the BEA will be carried out annually at the start of each tax year. The assessment then remains valid for the whole of the tax year.

Not sure what that means?

My tax code is 810L.

I've also found this in the terms for the vouchers:

Can all staff benefit from the scheme?
Although you must be made aware of the scheme and be able to apply, you may not be eligible to participate if you:

Do not have children in qualifying childcare (you may choose to use informal care such as a friend or member of the family)
Do not earn sufficient salary (a salary sacrifice cannot reduce your cash pay below the National Minimum Wage)
Already benefit from working tax credit.

At the time I selected my benefits my salary was still normal as the employer topped it up. I dropped to just SMP in mid January.

I'm worried that if I try to get the SMP paid back they'll say "Well actually you weren't entitiled to the vouchers in the first place so we want them all back."

Also, what are they going to do next month when SMP stops?

I'm afraid your employers are correct.

You've selected a benefit - in this case CCVs, which also happen to be tax efficient if you're a taxpayer on a cumulative basis - for which you pay via a deduction in your gross salary.

The tax benefit comes from the fact that they deduct £243 from your gross salary (which for a basic rate taxpayer should be very roughly equivalent to £175 of net salary), and in return get CCVs that you can exchange for £243 of childcare that you would otherwise have to pay for from your net salary.

You will have a CCV account with one of the providers which is racking up each month and which you can use on childcare at any point before your child turns 15.

I do agree that there's no tax benefit if you're not a tax payer. Although if you're only not a taxpayer while you're on maternity leave then the position will correct itself over the course of the tax year when you return to work and start to pay tax again.

I'm a tax adviser, so I'm comfortable that the above stuff is correct. What I'm not sure about is whether there's some separate employment law that prevents deductions of any kind (perhaps over a certain value) from SMP.

PM me if you want more information on your tax position.

Thanks cinnabarred, sorry that I seem to be a bit slow and confused about all of this.

Does that mean that I was not entitiled to start the childcare voucher scheme when I did my benefits selection in December. Will they ask for them all back?

OK, HR say that I need to contact pay and benefits, with them cc'd in.

I'm really worried they're going to ask for the vouchers back.

Cinnabar there absolutely is legislation that they can't deduct below smp. However I also thought you couldn't join a childcare voucher scheme until you had children.

At a very basic level, all you need to do to qualify for CCVs is have a child!

That said, the way the tax law that governs CCVs works means that there's no benefit to you if you're not usually a taxpayer (i.e. because your salary is below the annual personal allowance of £8,105). That's what the BEA bit is about. It's saying that your company is obliged to make sure that, all things being equal like that you're planning to return to your job after maternity leave, you will pay enough tax to benefit from receiving CCVs.

CCVs are a type of tax arrangement called a salary sacrifice. As I described above, you sacrifice £243 from your gross salary and in return get benefits worth £243 of net salary. As it's illegal to pay someone less than the National Minimum Wage, you can't participate in a salary sacrifice scheme if the sacrifice would take you below the NMW. That's what the your staff handbook meant when it said you have to earn about the NMW to qualify. I'm not 100% sure, but I don't think that SMP is governed by the NMW legislation because you're not working at all while on SMP.

The tax law specifies what qualifying childcare means. Basically it's formal childcare - a nursery, registered nanny or registered CM. They don't want people to select CCVs as a benefit, and then pay them to granny when granny would have looked after the kids for free anyway. And, less cynically, it's to ensure that the children benefit from a reasonable standard of childcare.

What happens next month, I'm not sure. Perhaps give your HR team a call to ask?

Also when writing suitable salary sacrifice agreements it's very important to make clear the employee is agreeing to take a lower salary plus whatever benefit. An employer has to keep providing benefits throughout mat leave and can't deduct below smp. I assume this is why most companies wouldn't allow changes whilst an individual is on mat leave.

I think spammertime is right - I think you do actually have to have delivered your child before you can join a CCV scheme. Let me check - I'll come back to you.

If the error is their's - in that they shouldn't have enrolled you into the scheme until you had your DD - then I think there's a good chance they'll see you right.

But if she signed up before having a child, then there'd be an argument the whole thing wasn't valid from the outset!

Sorry am majorly cross posting - we seem to be in agreement cinnabar

You def need to have a child before joining. I had several clients desperate to join before the rules on higher rate tax relief changed, but couldn't as their babies weren't born!

I had my child when I signed up.

I had her in November and had to select my benefits in December when she was a few weeks old. I was still receiving full pay at that point due to my employers mat package but this dropped to SMP in mid January.

The vouchers have continued to be deducted from SMP.

Interesting. I'm on a years Mat leave with second child. Full pay for 6 months SMP for 3 and then nowt for three. Was told that cc vouchers for my oldest would be paid out of my SMP and they would pay the CCVs for me for the final three months. not cOm

Should add that I'm hapPy with this arrangement but wondering if they've got it right!