If so you could be paying less tax and national insurance. childcare. Do you pay for childcare? Effective September 2012

Transcription

1 Do you pay for childcare? If so you could be paying less tax and national insurance. Effective September 2012 childcare

2 6 Sheffield Teaching Hospitals currently run a successful salary sacrifice scheme that provides a flexible and convenient way of paying your childcare costs whilst also making savings. 6 So what savings can I make? Below is a table showing the estimated savings that can be made if you are a basic rate taxpayer who pays 10.6% National Insurance Contributions (NICs) for the tax year 2012/2013. It does not take into account any additional savings you may make in employee pension contributions. 6 Who can be part of this scheme? All Sheffield Teaching Hospital NHS Foundation Trust employees are eligible to participate in the i-choose scheme. The only restrictions in place are that your salary after selecting the benefits must not reduce below the National Minimum Wage or the Lower Earnings Limit. Whether you will be better off is dependant upon your individual circumstances and you may find that in certain cases you will be worse off by choosing to enter the scheme. It is important that you investigate and take advice upon your individual circumstances. More information can be provided by the Trust s current Childcare Voucher Provider Fideliti. 6 How it works The Government wants to assist people in reducing their childcare costs and has therefore allowed employees who sign up to a salary sacrifice agreement to receive childcare vouchers that are exempt from tax and National Insurance contributions, up to a maximum of 243 per employee per month or 2,916 per year (as of April 6th depending on the outcome of earnings assessment). The arrangement that Sheffield Teaching Hospitals currently has with Fideliti is that vouchers can be ordered up to any value, but the maximum amount for which you can receive the tax and National Insurance benefits is the maximum level of vouchers set out in your earnings assessment. (Please refer to the section relating to earnings assessment.) 6 When can I join the scheme? As the salary sacrifice scheme has been running for a number of years within the Trust, you can join at any time and receive the benefits immediately. Monthly amount of childcare vouchers selected Annual salary sacrifice amount , , , , Annual tax and National Insurance savings These are examples only. The rates are correct at the time of publication.

3 6 How do I take part? To join the Childcare Voucher scheme you should: 1 Contact the voucher company Fideliti on , or go to their web-site to register your interest to join the scheme. 2 Fideliti will contact the i-choose Co-ordinator at STH to request an assessment of your projected earnings for the year. 3 The Projected Earnings Assessment will be sent to your home address with a letter of instruction and i-choose Childcare Personal Details Form. 4 You will need to check the Projected Earnings Assessment and contact the i-choose Co-ordinator immediately, on (0114) , to query any incorrect information. If required, an additional assessment will be sent to you ASAP. 5 Sign both the Projected Earnings Assessment and the Personal Details Form and return to the address provided on your letter. Both forms are required before you can progress further in the childcare voucher scheme. Delays in returning one or both of these forms could delay your enrolment. 6 The i-choose Co-ordinator will make contact with Fideliti on receipt of the signed forms. They will be notified of your tax bracket and your maximum tax free voucher allowance. 7 Fideliti will send you a welcome letter / to confirm the following details: Confirmation of your account creation The date of your first salary reduction for tax free vouchers Any additional deductions for vouchers above the tax free level Information if your childcare provider is not registered - and what to do next. 8 If you need to Opt Out of the scheme you are not permitted to rejoin again for another 12 months. Please also refer to the section in this leaflet regarding Temporary Cessation. 9 If your chosen childcare provider is one of the STH on-site nurseries please inform the relevant nursery of your intention to join this scheme immediately - and which month your vouchers will commence. 6 Where can I use the vouchers? The childcare vouchers can be used to pay for a wide range of childcare services, including our own on-site Nurseries and Holiday Club facilities, for children who are under the age of 16 (up to 1st September following their 15th birthday or 1st September following their 16th birthday, if they are disabled). All childcare and child carers must be registered with OFSTED (or equivalent for Scotland, Wales or Northern Ireland) and can include: Registered childminders, nurseries and play schemes. Out of hours clubs on school premises run by a school or local authority. Childcare schemes run by approved providers e.g. an out of school hours scheme or a provider approved under a Ministry of Defence accreditation scheme.

4 In England only, childcare given in the child s own home by a domiciliary worker or nurse from a registered agency that cares for the child or children (provided the person approved to give that childcare is not a relative of the child even if the relative is registered or approved). Approved foster carers (the care must be for a child who is not the foster carer s foster child). This list is not exhaustive and if you would like to find out if your childcare provider is registered for the scheme, please contact either Fideliti, Sheffield Teaching Hospitals or your childcare provider themselves as they may already be registered. 6 Can my partner participate in the scheme? The salary sacrifice scheme is open to all eligible Sheffield Teaching Hospitals employees and the maximum limit is 243 per parent not per child (dependant upon the earnings assessment outcome). Therefore if you both work for Sheffield Teaching Hospitals, you should both be able to participate. You may be able to link your accounts with your partner. To make arrangements please contact Fideliti who will provide you with further information. If however your partner does not work for Sheffield Teaching Hospitals but works for an organisation who also offers Childcare Vouchers, they too can participate in their own scheme. 6 What if I need to change my childcare arrangements at any point? If you need to make any changes to your childcare arrangements such as changing the amount or provider, please contact Fideliti. These changes are referred to as qualifying lifestyle changes and can also include having a new baby, maternity / paternity leave, divorce / separation or a significant change in your childcare arrangements etc. You can have a maximum amount of 4 changes per annum. If you do require a 5th change this will have to be an exceptional circumstance and you will need to discuss your requirement with the i-choose Co-ordinator. Refunds will only be given in exceptional circumstances. Please contact Fideliti if you do require a refund. They will take details of your reason for the request and will contact the Trust to make a final decision. 6 What happens if I leave Sheffield Teaching Hospitals? When you leave Sheffield Teaching Hospitals the reduction and if applicable deduction in your salary or wage will cease and you will no longer receive any childcare vouchers as part of this scheme. Any remaining vouchers can however still be used. 6 Changes in Childcare Voucher Legislation since 6th April 2011 The Government legislation has changed with regard to the maximum amount of vouchers that you can receive tax and NIC relief on if you are assessed as being either a higher (40%) or additional (50%) rate tax payer.

5 6 Why have these changes taken place? Higher and additional rate taxpayers previously benefitted from at least double the rate of tax relief. HMRC have introduced reforms so that all taxpayers will receive approximately the same level of tax exemption. 6 Who are affected? Only employees on the higher or additional rate of income tax who join the scheme on or after 6th April Please note that if you joined the scheme prior to 6th April 2011 and you opt out of the scheme and rejoin, you will need to be assessed under the new rules. 6 Earnings Assessment Sheffield Teaching Hospitals will have to undertake an assessment of your potential basic earnings for the tax year. This will be at the time you join the scheme and then each subsequent tax year. This will be based on the following: The notified tax code at the time of joining and thereafter at the beginning of each tax year. Basic pay as per your contract of employment Regional allowances and London Weighting Taxable benefits and expenses Shift allowances Contractual or guaranteed bonuses It does not include: Performance related or discretionary bonuses Overtime payments Benefits exempt from tax (e.g. Pensions contributions, charitable donations, all salary sacrifice amounts etc) Changes in income or hours during the year. If you join the scheme mid year then any earnings will be calculated pro rata on an annual basis. 6 Calculation of the Assessment This is only carried out once a year. This will be from the date you join the scheme and then at the beginning of each subsequent tax year. We will forward you an assessment when you join. If you agree the amount you will need to sign the form and forward this as instructed in your letter. If you disagree with the assessment you must contact the i-choose Co-ordinator immediately to discuss the amounts shown. It is important that you are correctly assessed. You will not be able to receive vouchers until the assessment has been carried out and you have agreed the amount.

6 We will calculate the amount within two weeks of receiving your request. It is important that you return the form as soon as possible to avoid any delay in providing you with vouchers. Fideliti will be informed of the maximum voucher entitlement and they will then contact you with the month that the first vouchers will be due. Any changes during the year will not have any impact on that current year s maximum voucher tax-free allowance. The amount of childcare vouchers you are entitled to receive tax-free can only be changed at the beginning of the tax year. 6 What if we get the assessment wrong? If the original assessment of your earnings was incorrect and we have provided you with tax free vouchers in excess of your correct allowance, then we have to inform HMRC of the outstanding taxable benefit. This will be on a P11D (taxable benefits and expenses) form. You will also receive a copy of this for you tax return/tax assessment. 6 Can I request extra Vouchers over and Above the Maximum Tax-free Limit? The maximum amount that is free from tax and National Insurance Contributions is 243 per parent per month (please refer to the table above for your maximum limit) but the current arrangement we have with Fideliti is that you can order The table below outlines the value of tax- free Vouchers you can receive: Tax banding Basic rate (unchanged) Higher Rate Additional Rate Weekly Monthly Annual 2,915 1,484 1,166 Note Savings on NICs and pensions contributions (if you are in the pension scheme) could also be affected by this change if you fall in the higher or additional rate banding. vouchers up to any amount but you will only receive the tax and national insurance benefits on the salary sacrifice up to the maximum limit as stated per parent per month (as of 6th April 2011). The facility to buy vouchers in excess of the maximum amount of your salary sacrifice, via deduction from your net pay, has been put in place to facilitate easier payment of amounts owing. Please note that the benefit you receive from the Trust is the amount that you arrange to salary sacrifice up to the maximum limit. Any excess voucher amount that you order through Fideliti is not a benefit from the Trust but an arrangement where the Trust will collect the payment on your behalf via your salary and pay this over. Alternatively you may choose to arrange to pay any excess direct to your childcare provider.

7 Prompt payment of all nursery fees, whether this is via their childcare vouchers, or for any excess, via payment directly to the Trust s Sales Ledger Department is the responsibility of parents / carers. 6 What if my employer has changed due to merger or business reorganisation? For example - you worked previously for Sheffield PCT and due to the reorganisation you now work for Sheffield Teaching Hospitals. If you were already enrolled before 6th April 2011 with your previous employer under childcare salary sacrifice and you transfer straight away to the Trust s i-choose scheme, then the new rules will not apply and you will retain your current level of tax relief. 6 What if my employer changes the Childcare Voucher provider? Sheffield Teaching Hospitals can change the childcare provider without affecting the employees status as an existing scheme member. 6 Contacts and Further Information More detailed information on salary sacrifice itself is available on the general i-choose leaflet which should be read in conjunction with this leaflet before deciding if this scheme is for you. Alternatively, further information can be provided by: Fideliti Childcare Vouchers on or on line This site provides information on all aspects of childcare arrangements including salary sacrifice and family tax credits. HMRC on line at this provides HMRC guidance for employees and parents on the new rules from 6th April The i-choose Co-ordinator on telephone number (STH Ext 52427) All rates and figures quoted in this leaflet are correct at the time of publication.

8

9 Contacts and Further Information More detailed information on salary sacrifice itself is available on the general i-choose leaflet which should be read in conjunction with this leaflet before deciding if this scheme is for you. You can contact the i-choose co-ordinator on (STH ext 52427). Revised August 2012