child care vouchers and boarding / after school activities

[dinah]

It does look like ths is true regarding employers and child care vouchers. If you look at the HMRC site regarding tax credits it does appear that if you can claim tax credits you are also entitled to an allowance towards after school child care as long as your child is between 5 and 15 and the school is registered with ofsted. I am wondering if this applies to children who board.

[hermanmunster]

Are families who are able to claim tax credits likely to be paying boarding fees? I don't know the cut off for tax credits but boarding fees can be pretty high.

[sherry_d]

Are families who are able to claim tax credits likely to be paying boarding fees? I don't know the cut off for tax credits but boarding fees can be pretty high.

At present you can claim tax credit up to £60 000 but new government want to change that to £50 000. Its really about £600 annually they get. There may be families on tax credit paying boarding especially families in the forces. I vaguely remember reading that forces parents have to contribute 10% of a school’s termly fees as a condition of receiving this allowance.

[hermanmunster]

That would make sense - more likely if they are making a contribution rather than paying the whole lot. 20k boarding school fees out of 60k gross, (41.5k take home ) would be a bit eye watering

[dinah]

What if you have a bursary and your income is below £40,000?In principle it would seem you can claim for after school care if your child is a boarder because the school will be ofsted registered and the child is being looked after outside of the normal school day.

[Gman]

Can I suggest that there are two schemes being mixed here.

1) Child Care Voucher: which are not means tested. You buy them out of your pre tax income to a monthly maximum. You can not pick and choose which months to buy them. They are issued in the name of Ofsted registered provider. You can buy them for more than 1 Ofsted registered provider, upto the monthly maximum. If both parents are working, they can both buy the maximum (combined apprxomately £580pm) each month.

2) Tax Credits (often referred to as Working Family Tax Credit): This is means tested and only applies if you have school age children (and pre school I believe). As mentioned, they are available upto £60k family income. There is a sliding scale that applies so that the minimum if you qualify is £50 pm. This is paid directly into your bank account. You do not have to provide details of any childcare provider. To determine if you qualify go to www.direct.gov.uk. Each year you need to declare your income and projected income, and as all the government advertising reminds us, please let them know of any change in circumstances.

You can be claiming both of these credits.

The Lib Dem policy was to limit both. Firstly reduce the upper limit on the Tax Credits to a family income of £50k pa. And secondly means test the Childcare Vouchers on an income basis.

[mike1880]

Gman is correct, two different things are being confused.

What we're talking about here is Childcare Vouchers; this is a scheme which your employer may offer. If they offer it, you can choose to have up to £243 per month of your salary paid as childcare vouchers, and you don't pay tax or national insurance on them. If you take the full amount that saves something like £800 a year for a standard rate taxpayer or £1000 for higher rate (and both parents can take them if available). In theory I can vary the amount I take on a month by month basis but haven't tried it.

They can be used for any childcare provided by an Ofsted-recognised carer. That can be a childminder, play group, after school club, etc., and that also includes boarding fees. There is also likely to be a childcare element to the fees for day pupils at boarding school and also to the fees of most independent day schools (e.g. after school prep) but you'd have to get the details from the individual school.

Mine are not issued in the name of a specific provider; the money is paid into an account held with the voucher provider and I can make payments from there to any individuals/organisations I have registered as a carer for either/both kids (obviously, they have to be registered with the provider and have to be an Ofsted-approved carer). It's all very neat - I can manage the whole thing online - add carers, set up regular repeating payments, make one-off payments, etc. Other providers are (in my experience) not nearly so flexible and I shall miss it when my employer changes to someone else, as they inevitably will sooner or later.

Mike

[mike1880]

By the way: there's a section in the budget this week about measures previously announced by Labour that have been confirmed by the coalition, amongst which is this:

2.123 From April 2011, the weekly amount that parents joining an Employer-Supported Childcare scheme will be able to claim exempt of income tax and disregarded of NICs will remain at £55 for basic rate taxpayers, but will be
reduced to £28 and £22 per week for higher and additional rate taxpayers respectively. All current users will continue to enjoy the same exemption and disregards beyond April 2011. (2009 Pre-Budget Report)

In other words: if you currently receive them, your tax position won't change, but if you join a scheme after April '11 your exemption will be limited if you pay 40%+ tax.

Mike

[dinah]

Suppose you have child who boards at a school and you have a bursary. Your income allows you to claim child tax credits but not working tax credits. Can you claim for the child care element of before and after school hours care?

[Gman]

Here is the HMRC website to determine what you can claim.

http://taxcredits.hmrc.gov.uk/Qualify/W ... edits.aspx