Reward insight
therefore better off under the old scheme, until they are spending £12,247.20 a year on childcare. ● Additional rate tax payer calculations – With the old scheme parents can buy £110 of CCVs each month, so a total of £2,640.00 for the year if both are additional rate tax payers. This means that they can pay for £2,640.00 of childcare, but it only costs them £1,399.20, as
there is a combined tax and NICs saving of £1,240.80. The new TFC system is not available to parents who earn more than £100,000 a year. This means that additional rate tax payers who are unable to sign up to a voucher scheme will be up to £1,240.80 worse off a year. If they signed up for CCVs before April 2011, and have not left the scheme at any point since this date, they are eligible
to buy £243 worth of vouchers a month, so a combined amount of £5,832.00 a year. The combined tax and NICs saving is £2,741.04, meaning that for a net cost of £3,090.96, they can pay for £5,832.00 of childcare. As they do not have access to the new scheme, unless they can remain in the old voucher scheme they will be missing out on a saving of up to £2,741.04 a year. n
Basic rate tax payer calculations
TFC – Maximum saving for two children
CCVs – maximum saving available
TFC – same cost to parents
TFC – same saving
TFC – Maximum Saving per child
£3,965.76
£3,965.76
£7,464.96
£8,000.00
£16,000.00
Cost to parents
£1,866.24
£991.44
£1,866.24
£2,000.00
£4,000.00
Saving
£5,832.00
£4,957.20
£9,331.20
£10,000.00
£20,000.00
Childcare value
Higher rate tax payer calculations
TFC – Maximum saving for two children
CCVs – maximum saving available
TFC – same cost to parents
TFC – same saving
TFC – Maximum Saving per child
£1,726.08
£1,726.08
£4,999.68
£8,000.00
£16,000.00
Cost to parents
£1,249.92
£431.52
£1,249.92
£2,000.00
£4,000.00
Saving
£2,976.00
£2,157.60
£6,249.60
£10,000.00
£20,000.00
Childcare value
Combined basic rate and higher rate tax payer calculations
TFC – Maximum saving for two children
CCVs – maximum saving available
TFC – same cost to parents
TFC – same saving
TFC – Maximum Saving per child
£2,845.92
£2,845.92
£6,232.32
£8,000.00
£16,000.00
Cost to parents
£1,558.08
£711.48
£1,558.08
£2,000.00
£4,000.00
Saving
£4,404.00
£3,557.40
£7,790.04
£10,000.00
£20,000.00
Childcare value
Higher rate tax payers who signed up before April 2011 payer calculations
TFC – Maximum saving for two children
TFC – same cost to parents
TFC – same saving
TFC – Maximum Saving per child
CCVs – maximum saving available
£3,382.56
£3,382.56
£9,797.76
£8,000.00
£16,000.00
Cost to parents
£2,449.44
£845.64
£2,449.44
£2,000.00
£4,000.00
Saving
£5,832.00
£4,228.20
£12,247.20
£10,000.00
£20,000.00
Childcare value
Additional rate tax payer calculations
CCVs – maximum saving available for those signed up pre April 2011
CCVs – maximum saving available
£1,399.20
£3,090.96
Cost to parents
£1,240.80
£2,741.04
Saving
£2,640.00
£5,832.00
Childcare value
33
Issue 35 | November 2017
| Professional in Payroll, Pensions and Reward |
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