Deadlines & Tax - Zamu

Deadlines & Tax

Don’t Miss The Vouchers

With the rising costs of childcare where nursery costs in provincial towns are often £50 per day, many families are trying to work out how to fund this cost.

If family has low income they can look at tax credits, or universal credits.  For many working families this doesn’t help as their income is too high, so what are the alternatives.

Childcare vouchers

 

This scheme is being phased out.  If you are not already taking advantage of this scheme you don’t have long to join. On 6 April 2018 this was due to be phased out, but it has received a reprieve until 4th October 2018 when childcare voucher schemes will close to new applicants. 

 

This scheme is implemented by employers and therefore is only available to employees and not the self-employed. You can take up to £55 a week of your wages as childcare vouchers, which you don’t pay tax or National Insurance on.  These vouchers are then used to buy childcare at an approved setting.

 

Childcare vouchers can be used instead of working tax credits and some families may be better off with this option.  Check here

https://www.gov.uk/childcare-vouchers-better-off-calculator

 

Tax Free Childcare

 

This allows parents then put the money (after tax & NI) into a special NS&I account for childcare costs through HMRC.  Up to a maximum of £8,000 a year the government add a further 20% (£2,000) into the account then the approved childcare setting is paid direct from the NS&I account.  

 

The scheme is open to working parents:

• Who are employed or self-employed

• Who do not receive tax credits or Universal Credit

• The salary of each partner must be worth more than 16 hours at national minimum wage rates

• Both parents must work if it is a two-parent family (with some exceptions)

• The child must be under 12 years of age disabled child under 17.

 

Comparison

 

 

 

Tax Free Childcare

Childcare Vouchers

Eligibility

Employed & Self employed

Employee only if employer offers

Child maximum age

11 (16 if disabled)

15 (16 if disabled)

Minimum earnings

£120 per week, if a couple both must work at least 16 hours a week

No minimum earnings.  1 parent must work

Maximum Income limit

Less than £100,000 per parent

No Limit

Maximum gain of

£2,000 per child (£4,000 if disabled)

£930 per parent (basic rate taxpayer)

£624 per parent (higher rate taxpayer)

£590 per parent (additional rate taxpayer)

Basic explain

Government pays 20% of childcare

No tax or NI to pay on childcare costs

Best option for

More children and higher childcare costs

Fewer children and lower childcare costs