Childcare vouchers and tax free childcare
Discussion
My wife's recently left her job to go self-employed and has just told me she's signed up to tax free childcare. I haven't left my job (IT contractor) and would prefer to continue using childcare vouchers.
Am I right in thinking that she's given me the job of having to close down my childcare voucher scheme accounts or can I continue as I am?
Am I right in thinking that she's given me the job of having to close down my childcare voucher scheme accounts or can I continue as I am?
768 said:
My wife's recently left her job to go self-employed and has just told me she's signed up to tax free childcare. I haven't left my job (IT contractor) and would prefer to continue using childcare vouchers.
Am I right in thinking that she's given me the job of having to close down my childcare voucher scheme accounts or can I continue as I am?
What do you mean when you say your wife has signed up for tax free childcare?Am I right in thinking that she's given me the job of having to close down my childcare voucher scheme accounts or can I continue as I am?
The childcare voucher provider I was using didn't have an option to close down and refund the money. So I ended up with something like £4k in the pot which took some time to spend.
LeoSayer said:
What do you mean when you say your wife has signed up for tax free childcare?
This thing, I think.https://www.gov.uk/tax-free-childcare
From recent experience, and if memory serves (I may very well be wrong), the Childcare Voucher Scheme closed to new members circa 2018, and was to be replaced by the Tax-Free Childcare scheme.
However, if you were already on the Childcare Voucher Scheme with your existing Employer (as I was, commencing it well prior to my wife's maternity leave ending), then you could continue on the Voucher Scheme - and I have, with my better half also signing-up with her Employer prior to the deadline.
All that is to say that as far as I know, you can't mix & match the two - if your wife applies for the Tax-Free Scheme, then you cannot continue to claim Childcare Vouchers, and must exit the scheme.
Actually, I just now checked the 'Edenred' website, which has the following FAQ:
[i]Can I stay on the Childcare Vouchers scheme if my partner is claiming Tax-Free Childcare?
No. You will not be eligible to stay on the Childcare Vouchers scheme if your partner is on the Tax-Free Childcare scheme.[/i]
However, if you were already on the Childcare Voucher Scheme with your existing Employer (as I was, commencing it well prior to my wife's maternity leave ending), then you could continue on the Voucher Scheme - and I have, with my better half also signing-up with her Employer prior to the deadline.
All that is to say that as far as I know, you can't mix & match the two - if your wife applies for the Tax-Free Scheme, then you cannot continue to claim Childcare Vouchers, and must exit the scheme.
Actually, I just now checked the 'Edenred' website, which has the following FAQ:
[i]Can I stay on the Childcare Vouchers scheme if my partner is claiming Tax-Free Childcare?
No. You will not be eligible to stay on the Childcare Vouchers scheme if your partner is on the Tax-Free Childcare scheme.[/i]
I switched job in November last year and has to stop the vouchers. Unless your partner has already applied, Id stick to childcare vouchers. The system, at my previous employer at least, was very straight forward. I’ve tried spending two hours applying for the tax free childcare now and I’m still no closer than I was. The amount of information they want off you and your partner is ridiculous, and I can’t help thinking that once you’re in the scheme, it surely can’t be an easier than the previous one.
Anyone else got any experience using the new scheme?
Anyone else got any experience using the new scheme?
BobSaunders said:
I wish i applied for childcare vouchers. I am getting rinsed.
Got the email from work to say it was closing last year, thought I'd better do that....totally forgot and rang on the day after pleading to let me in... NO CHANCE I do the government one and it's ok once set up
The old scheme was was salary sacrafice scheme where you got 243 or 112 (high rate tax payer) into your child care account. This scheme closed in 2018 to new members.
You ended up with the vouchers paid into a childcare voucher account and could manage making payments to childcare providers from the account (info for those who are new to this).
The new scheme allows you to pay money into a government account and recieve a tax top up. I'm about to look into it as I am changing jobs and will come out of the old scheme.
Every little helps - I've got a 5 & 3 year old who have attended nursery for 3 days a week since they were around 1 years old. So far I have spent £60,000 on childcare. It really is depressing.
You ended up with the vouchers paid into a childcare voucher account and could manage making payments to childcare providers from the account (info for those who are new to this).
The new scheme allows you to pay money into a government account and recieve a tax top up. I'm about to look into it as I am changing jobs and will come out of the old scheme.
Every little helps - I've got a 5 & 3 year old who have attended nursery for 3 days a week since they were around 1 years old. So far I have spent £60,000 on childcare. It really is depressing.
You can't stay on the old scheme if your wife is on the new scheme.
There are some key differences between the old and new scheme that are worth thinking about as you could be significantly worse off depending on your circumstances.
The old scheme let you use £243 (or £128 if you're higher rate) anyway you like, so you get the same tax discount whatever. This means if you have 1 child in nursery 2 day a week your costs are roughly zero if both parents claim vouchers.
The new scheme is a 20% top-up against money you spend with a fixed limit. So although the schemes are notional equivalent, if you have 1 child in two days a week, you get a 20% discount and have to find the 80%. The new scheme is only good if you have high costs.
There are some key differences between the old and new scheme that are worth thinking about as you could be significantly worse off depending on your circumstances.
The old scheme let you use £243 (or £128 if you're higher rate) anyway you like, so you get the same tax discount whatever. This means if you have 1 child in nursery 2 day a week your costs are roughly zero if both parents claim vouchers.
The new scheme is a 20% top-up against money you spend with a fixed limit. So although the schemes are notional equivalent, if you have 1 child in two days a week, you get a 20% discount and have to find the 80%. The new scheme is only good if you have high costs.
pfnsht said:
Every little helps - I've got a 5 & 3 year old who have attended nursery for 3 days a week since they were around 1 years old. So far I have spent £60,000 on childcare. It really is depressing.
Yikes. I've got a 6 year old and twin 2 year olds. All of them were in nursery 4 days a week from about 9 months. I'm too tired to do the maths, but it is eye watering.At least the twins get 30 hours free next year, most of the time.
jamest1988 said:
I’ve tried spending two hours applying for the tax free childcare now and I’m still no closer than I was. The amount of information they want off you and your partner is ridiculous, and I can’t help thinking that once you’re in the scheme, it surely can’t be an easier than the previous one.
Apparently they had some setup issues when first launched. We skipped the salary sacrifice option as that would have reduced our matched employer pension contribution, over the long run the reduced pension contribution wasn't worth the saving - especially 5 days at nursey, so vouchers woudlnt have made much difference.Once setup the new scheme is quite easy, 2 way authentication on the phone to log in, but otherwise no harder than any other online banking system.
Edited by gangzoom on Thursday 1st August 06:16
pfnsht said:
Every little helps - I've got a 5 & 3 year old who have attended nursery for 3 days a week since they were around 1 years old. So far I have spent £60,000 on childcare. It really is depressing.
No idea how people are managing financially with more than just one kid let alone 3 which seems to be new norm.Our daughter gets 30hrs free starting next month, thats £7k back in the bank over next 12 months, going to local state primary school so no fees for while......Unless a second one turns up, and it all begins again.
768 said:
twin 2 year olds.
On the old scheme the problem with twins is that you can't spread your costs over a longer period like you do if you have two kids a year or two apart instead.Is the new scheme limited per-child so better for more children, or still limited per-taxpayer?
The trick we missed was not signing up for vouchers as soon as ours was born, rather than waiting 9 months for them to go to Nursery, that would have let us start with £3.5k sat in vouchers.
When my wife was off work with the second and the first wasn't in Nursery, we built up a good war-chest that got us through the worst before the first got his 30 hours. It helped that my Wife's employer paid the £243 into the vouchers even when her earnings dropped to statutory maternity.
Overall the new scheme seems a lot harder to get the same benefit from, which I guess was the point as what else are middle earners for these days.
When my wife moved jobs we stayed with me on the old scheme because the two options are broadly the same for us as we now have fairly low costs.
The old scheme is good in that you can build up a positive balance in periods where your costs are low, eg if you don't have them in nursery in school holidays etc. Can you do that in the new scheme?
BoRED S2upid said:
Same here roll on September it’s pretty much been 4 years paying nursery costs between the two of them I’m looking forward to having the money back come September it will be like a decent pay rise!
Mate, it's incredible. I'm still having £243 deducted from my salary that I've basically forgotten about, so when I can can that off entirely it'll be mega.Of course there's still wrap-around care to pay for so we're not out of the woods yet.
The beauty of tax, NI and all the complications. I worked out that £243 less 32% (Tax and NI) is the same as £390 less 20% (around £78). Both me and the Missus can get Childcare vouchers and are nursery fees are under £780/month so it was more cost effective to use kiddivouchers. Unfortunately the new scheme supersedes Kiddivouchers so if your Wife has signed up you will now have to move onto that...unless you can some how get out of it still and claim Kiddivouchers instead.
Kiddivouchers further saved me money/month as it's deducted before student loan, so my student loan repayment came down slightly as well.
It's nice to see we're not the only one's finding childcare the biggest leak in our bank account. Little one turns 3 in December so we get 30 hours free from January next year. It'll save us over £200/month! Looking forward to that!
Kiddivouchers further saved me money/month as it's deducted before student loan, so my student loan repayment came down slightly as well.
It's nice to see we're not the only one's finding childcare the biggest leak in our bank account. Little one turns 3 in December so we get 30 hours free from January next year. It'll save us over £200/month! Looking forward to that!
Whether or not you remain in the £243 voucher system depends on what you pay in childcare, you'll need to work it out. I'm not aware that if you sign up for TF CC you can't any longer use the £243 system but obviously if you start using it then certainly so.
It's a shame they never advertised the fact you could build up a pot in the 243 system and it would have helped a lot.
Many of you refer to the 30 free hours system. It isn't. Free that is. It's 30 funded hours and councils pay a set rate that is below many charges. Some ask you to top it up. Others don't.
It's a shame they never advertised the fact you could build up a pot in the 243 system and it would have helped a lot.
Many of you refer to the 30 free hours system. It isn't. Free that is. It's 30 funded hours and councils pay a set rate that is below many charges. Some ask you to top it up. Others don't.
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