Childcare vouchers

A question about : Childcare vouchers

Just wondering if someone can give me a bit of help with this. Basically, I know how the system works when you're spending Ј55 a week or more on childcare, but not otherwise!

Husband and I have one child who will be going to nursery in January for a couple of sessions a week, until August when she'll get a free school nursery place. Privately paying, not eligible for any free hours, better off doing it this way than tax credits. Husband's work offers vouchers, mine doesn't, so we'd be on one lot only. Basic rate tax.

The childcare itself will be Ј30 per week, plus Ј4 for meals, so Ј34 total. I know that the maximum amount of vouchers that can be claimed is Ј55 a week, so obviously we'd ask for less than this. And the maximum saving is Ј930 annually, or about Ј18 a week. Daughter will attend for about 32 weeks total, at Ј34 a week, so the total cost will be roughly Ј1100 including food, Ј1000 if not.

So my questions are:

1. Firstly, is Ј30 or Ј34 the relevant figure here? I'm not sure if we include food or not.

2. Secondly, as we're not spending Ј55 a week, am I right in thinking the saving to us would be a bit less than the roughly Ј18 a week it would be if we were? Even though we will spend more than Ј930 on the childcare over the year? I'm assuming there isn't a way for us to simply get Ј930 off the whole bill and just pay the remainder. I just want to know for budgeting purposes. I'd been working on the assumption that we'd save about three fifths of the maximum weekly total as we'd only be using three fifths of the vouchers, ie a saving of about Ј12 a week max.

Any advice much appreciated!

Best answers:

• You don't have to claim the full Ј243 a month if you don't need to - and you should be able to adjust the amount if your circumstances change in the future.
  What you could also do is to claim more than you need each month and let the money accumulate for future use. So if you know that you'll need Ј1100 in total then you could claim Ј220 a month for five months. The money will accumulate in your childcare voucher account and then you can send as much as you need each month onto the childcare provider.
  And I would have thought that if the nursery charges extra for meals then you should be able to pay for this extra with your vouchers.
  And the exact saving is simply the amount of income tax and national insurance that you would normally pay on the amount of the voucher.
  Also remember that the vouchers are still useful once the child is at school because it can be used to pay for holiday clubs and breakfast/afterschool clubs.
• So I can claim more than needed each month? That's good to know. In theory we could claim the full amount and stockpile, then- is that what you'd recommend? I'm not sure we'll actually need holiday and wraparound care, but you never know, and obviously lose nothing by claiming.
• Sure. Although it doesn't actually cost us anything anyway, does it? I'm not too bothered about whether it sits in the account or goes to the taxman!
• It does cost you to stockpile though if you aren't going to use them. You don't pay tax on the amount but if say you claim Ј100 of voucher that will still cost you Ј80 that then won't be in your paypacket. So worth stockpiling if you think you will use them at some point but otherwise you'd be losing the Ј80. It can be tricky or impossible to change them back into money again.
• Perhaps I've misunderstood, then? I was under the impression you effectively offset it against tax and so it would reduce HMRCs cut of the wage, but not the take home.
• I claim the full Ј243 a month in vouchers - so my pre-tax earnings are Ј243 lower. The savings I make are on the income tax and national insurance contributions that I would have paid on the Ј243. So yes, it's a significant saving but you'd be foolish to do it if you didn't have a childcare need.
• They take your vouchers pre tax, so effectively tax free. You are then taxed on the remainder. So yes, it affects your take home. I get 243 in vouchers but theoretically it only costs me 170 ish of my wage.
• I think I get it!
• Check with the nursery whether you can pay for the lunches with vouchers. At mine, you can't they have to be paid with cash.