Childcare voucher schemes

[natalie_1982]

In complete idiot terms, could somebody explain how a salary sacrifice child care voucher scheme works? Specifically I am looking at the Imagine... Co-operative one. I can't make head nor tail of it, or my entitlements. I would need fulltime childcare.

[jake-the-peg]

In basic terms what happens is that you take a pay cut.

The difference is paid into a scheme which pays your childminder.

That means that the difference should not be subject to tax and national insurance if the scheme has been set up correctly

There's information here on how it interacts with tax credits
http://www.hmrc.gov.uk/childcare/interaction-t c-cv.htm.

Some schemes have a concept of a nominal salary which is the original salary before sacrifice and is used to calculate things like pay rises bonuses etc. so that you don't lose out on things like this.

[Aunty Lou]

I don't see it as a pay cut! if you are paying Nursery fees from your wages anyway its actually a bonus!
I have vouchers and basically I have �243 of my wages paid to me in vouchers.this amount is taken off my wages before they tax and NI deduct so basically i get �243 tax free before they pay me!
Obviously this is a mega bonus if you have a huge day care bill like me !!!!!!!!