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Childcare vouchers / salary sacrifice

Bit out of practice!

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I've recently moved to a new company, and one of the employees wants to waive some of her salary and have childcare vouchers instead. It's been about 6 years since I last operated a childcare voucher scheme, maybe more, so I'm a bit rusty.

The employee had childcare vouchers with an older child (starting in 2013), stopped them while on maternity leave, and now wants to start them again.

I think – based on what I did years ago – I need to draw up an agreement to formally waive part of her salary; make arrangements to provide vouchers via a childcare voucher provider; and have her payslip show the post-salary-sacrifice amount as the gross, with no mention of the childcare deduction on the payslip. As she is a basic rate tax payer, I think she is entitled to a maximum of £243 per month.

However, the previous arrangement had no formal documentation of the waived salary; the money was paid directly to the childcare provider; the payslip showed her full gross and then a deduction for the childcare; and she was limited to £124 per month which she says she was told was the maximum she could have.

So I guess I'm looking to be put straight (if the running of these schemes has changed since I last received advice), or reassured that I am right (if I am) before I set it up.

Thanks for reading and for any advice.

Replies (5)

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By Manchester_man
27th Jun 2016 22:05

I do the vouchers myself. There's no requirement to use a third party childcare vouchers provider. As long as you make a template that contains all the required information, that's fine. Have a look online and Base your template of others.

If you want a copy of mine and my template salary waiver & childcare vouchers scheme policy, PM me.

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By Manchester_man
27th Jun 2016 22:06

Also yes, the company can pay direct to the childcare provider I believe.

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By alejandra
27th Jun 2016 22:56

Thanks Manchester_man. I guess things have moved on. I'd be most grateful for your templates - thank you

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By landscaper
28th Jun 2016 15:54

I have just set up a system for our company. After some research, I selected Employers for Childcare http://www.employersforchildcare.org/
as one of Martin Lewis' recommendations. They are a Social Enterprise. The set up was easy and it gave me all the materials to send out to all employees. One has taken it up and I show on his payslip his gross (weekly) pay, then the salary sacrifice amount. I have a note on file that the pre-sacrifice amount must be used in calculating future pay incresases etc. He is paid weekly but I just log on, "order" the voucher amount and, once I have paid that, it is put in to his account with them. They then deal with paying the child car people etc. I pay an admin fee but this is negligible and we, as employers, are saving money too from the 'Ers point of view. I wrote to HMRC advising that we had put a SS scheme in place; they asked to look at the documentation and payslips before and after and have now "approved" our scheme.

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By alejandra
28th Jun 2016 19:32

Thanks Landscaper, that's really useful. Particularly your description of the payslip and the fact that it was approved. Last time I was told that acknowledging the pre-sacrifice salary on the payslip would invalidate the sacrifice!

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