Question on Childcare vouchers

[Pete T]

Hi Every

I looking on how childcare vouchers work ? do need sign up to website and if so what the link ? and what other vouchers can be used for childcare ? as like get idea before start becoming Childminder whats needed and what best way doing stuff.

[bunyip]

Hi Every

I looking on how childcare vouchers work ? do need sign up to website and if so what the link ? and what other vouchers can be used for childcare ? as like get idea before start becoming Childminder whats needed and what best way doing stuff.

[This is a copy/paste of an old post, so apologies to members who've seen it before.]

How it works, in brief. Mum's payroll sets aside a portion of her salary (up to £243pm) as a "salary sacrifice" and pays that into a CV (childcare voucher) account, using a CV provider company. This reduces her salary (which can have implications for future pension and other benefits) but has the advantage that she does not pay income tax or National Insurance on that amount. She can save over £900pa this way. CVs are then paid into the account of an Ofsted-registered childcarer (CM, nursery, etc.) Mum can choose how she does this:

1. Paper vouchers (a bit of a rarity, but still an option) which the CM has to submit to the CV company: sometimes by post, or sometimes by telephone/email using the code numbers.
2. Online - automatic transfer of the same amount monthly (the equivalent of a bank standing order)
3. Online - parent inputs the amount manually, as much/little as she wants, when she wants

IME most mums use option 3, especially if the bill always exceeds £243pcm, then top up the balance of my bill in cash/cheque/BACS. But some use option 2, especially if the bill varies significantly. The CM receives an email to say the CV payment has been made to their CV account, with a reference (usually the child/clients's name) so you know who has paid. Later (usually within a couple of days) the CM receives another email saying the £££ has been transferred out of the CV account and into the nominated bank account. It's then up to the bank to drag its heels for the next 3-4 days over clearing the funds so you can buy beer.

I accept vouchers from different companies at present. I was nervous about it at first (I like to be in control) but regard as really easy now. Get the set-up right; accept that there'll be about a week's delay between the invoice being paid and you having the actual cash to spend; and it's often far safer than relying on mu to find a cashpoint anywhere in the developed world or write a cheque with a consistent degree of competence.

There are numerous CV companies operating within what is essential the same scheme. They operate in similar but not quite identical ways. It is vital to be registered with the same CV provider as the client, or you won't get paid. The parent needs to tell you exactly which voucher provider they'll be using. To avoid confusion (and registering with the wrong company) insist that she provides the contact telephone, email and website url. (ie. Make sure it's her fault if anything goes t1t5up.)

You will need to register on the particular voucher company's website. This can take anything from a few minutes (for those CV companies which do the entire process online then they verify your Ofsted details for themselves) to several weeks for those where you register online,but still have to post a copy of your certificate off before they'll complete the process. I've no idea why it's different for each CV provider, but just live with the fact that it is. (But then I've no idea why Ofsted ask me 'security' questions when I 'phone them cos the information they want is not hard for anyone to get hold of.) I digress.... Just make sure the client is aware that it can take time to set up, and s/he may have to pay your first bill some other way (and never take CVs to cover a deposit - that can get messy too.)

You should set payment-in-advance terms the same as for any other client, and it's up to parent whether s/he settles the 1st month by cash or voucher. But it should be on time without any excuse about the vouchers. If her employer has a voucher scheme, they can set up her end of things ahead of time to be ready for when it's needed. Granted, if she's paying you out of her very first pay packet then she's maybe not had time to get the voucher ball rolling. But the essence of it is: lack of planning on her part should not constitute a crisis on your part. Likewise, if her payroll team scr3ws up, that's not your problem. By accepting the vouchers, you are saving her money. There's no reason why saving her money should inconvenience you or entitle her to more favourable terms than you'd offer any other client.

A few things I wish I'd known before I accepted vouchers for the first time (and I'm assuming you're having the whole thing done automatically, not dealing with 'paper vouchers'):-

1. Talk to the voucher company. They know everyone has a first time, and it's in their interests to help you have a hassle-free experience. They do a highly unspecialised job (taking money from one account and putting it in another - not exactly mind taxing stuff ) so they've already worked out that they only compete with one another on who can offer the best customer service. They'll also be able to tell you what details you need to give the client in order to pay you. Again this differs from one CV provider to another. It can be a unique reference number or might be as simple as selecting your name/postcode from a drop-down list.

2. When you receive an email saying the vouchers have been transferred to your account, it does not mean the cash is in your bank yet. Since any delay in clearing is usually down to the recipient's bank, remember that part is not the parent's fault. It's up to the parent to get the vouchers into your voucher account by the due date, but the rest isn't her problem. You may wish to adjust her due payment date to allow for the sluggishness of your own particular bank (even their computers don't work weekends.) You can't say she's paid late if she has transferred the CVs but they haven't arrived in your bank account. If this is going to give you a cash-flow problem, then you must bring forward the contracted due date for payments. It is not enough to say some amateurish 80ll0ck5 about "cleared funds" - you are running a proper business, not flogging dodgy videos on eBay.

3. Check your settings. You should ask the voucher company to make sure their computer searches your account for vouchers and transfers them to your bank account every day. I know this sounds crazy, but a lot of CMs make the quite reasonable mistake of setting it to check once a month. That can mean waiting a whole month to get hold of the cash if the computer is 'looking for' a voucher payment the day before it arrives - because it won't start 'looking' again for a whole nother month. AFAIK this can happen with at only one of the voucher companies, but it's a PITA to find out the hard way.

4. Never, ever, ever refund a voucher payment in cash. Don't even consider it. Technically it's tax fraud and money laundering, which could have HMRC crawling all over you. If mum overpays by vouchers, then you can carry over the credit to the next bill or contact the voucher company to transfer the credit back into her voucher account. Tell her this. Tell her that you are giving her information, not entering into a discussion.

5. You are not responsible for how mum manages her voucher account. If she pays too much of her salary in and can't get it out: her problem, not yours.

6. Don't take any BS from mum about the voucher company delaying transactions. Parents sometimes try it on and say "oh I expect the voucher company gets delayed by the bank holiday", etc. I got my December vouchers credited on Boxing Day. In fact, they frequently draw down the money from the employer's payroll several days before the parent's due pay day. I tell my voucher-paying parents that I expect the credit on time and no arguments. First time they're late I'd issue a warning, second time and I refuse to accept anything but cash or BACS from the parents. They know the vouchers save them money, so none of them have messed me about so far.

And finally...........................Be aware, this is how it runs now. The UK regime is planning to phase in an alternative scheme with the exciting name of "Tax Free Childcare". This is supposed to run in parallel with CVs but a parent will only be allowed to run on one scheme or the other and not allowed to join or re-join a CV scheme if not already joined by the time TFC starts. The long-term aim is to eventually phase out CVs and put everyone on TFC. There is very little detail on this at the mo. Updates tend to appear on CV websites and Martin Lewis's Money Saving Expert site, but we're still waiting to see how it will all work out. I'm only saying this so you're aware it will eventually change, but just go with the stuff on CVs for now.

Hope this helps.

[Pete T]

[This is a copy/paste of an old post, so apologies to members who've seen it before.]

How it works, in brief. Mum's payroll sets aside a portion of her salary (up to £243pm) as a "salary sacrifice" and pays that into a CV (childcare voucher) account, using a CV provider company. This reduces her salary (which can have implications for future pension and other benefits) but has the advantage that she does not pay income tax or National Insurance on that amount. She can save over £900pa this way. CVs are then paid into the account of an Ofsted-registered childcarer (CM, nursery, etc.) Mum can choose how she does this:

1. Paper vouchers (a bit of a rarity, but still an option) which the CM has to submit to the CV company: sometimes by post, or sometimes by telephone/email using the code numbers.
2. Online - automatic transfer of the same amount monthly (the equivalent of a bank standing order)
3. Online - parent inputs the amount manually, as much/little as she wants, when she wants

IME most mums use option 3, especially if the bill always exceeds £243pcm, then top up the balance of my bill in cash/cheque/BACS. But some use option 2, especially if the bill varies significantly. The CM receives an email to say the CV payment has been made to their CV account, with a reference (usually the child/clients's name) so you know who has paid. Later (usually within a couple of days) the CM receives another email saying the £££ has been transferred out of the CV account and into the nominated bank account. It's then up to the bank to drag its heels for the next 3-4 days over clearing the funds so you can buy beer.

I accept vouchers from different companies at present. I was nervous about it at first (I like to be in control) but regard as really easy now. Get the set-up right; accept that there'll be about a week's delay between the invoice being paid and you having the actual cash to spend; and it's often far safer than relying on mu to find a cashpoint anywhere in the developed world or write a cheque with a consistent degree of competence.

There are numerous CV companies operating within what is essential the same scheme. They operate in similar but not quite identical ways. It is vital to be registered with the same CV provider as the client, or you won't get paid. The parent needs to tell you exactly which voucher provider they'll be using. To avoid confusion (and registering with the wrong company) insist that she provides the contact telephone, email and website url. (ie. Make sure it's her fault if anything goes t1t5up.)

You will need to register on the particular voucher company's website. This can take anything from a few minutes (for those CV companies which do the entire process online then they verify your Ofsted details for themselves) to several weeks for those where you register online,but still have to post a copy of your certificate off before they'll complete the process. I've no idea why it's different for each CV provider, but just live with the fact that it is. (But then I've no idea why Ofsted ask me 'security' questions when I 'phone them cos the information they want is not hard for anyone to get hold of.) I digress.... Just make sure the client is aware that it can take time to set up, and s/he may have to pay your first bill some other way (and never take CVs to cover a deposit - that can get messy too.)

You should set payment-in-advance terms the same as for any other client, and it's up to parent whether s/he settles the 1st month by cash or voucher. But it should be on time without any excuse about the vouchers. If her employer has a voucher scheme, they can set up her end of things ahead of time to be ready for when it's needed. Granted, if she's paying you out of her very first pay packet then she's maybe not had time to get the voucher ball rolling. But the essence of it is: lack of planning on her part should not constitute a crisis on your part. Likewise, if her payroll team scr3ws up, that's not your problem. By accepting the vouchers, you are saving her money. There's no reason why saving her money should inconvenience you or entitle her to more favourable terms than you'd offer any other client.

A few things I wish I'd known before I accepted vouchers for the first time (and I'm assuming you're having the whole thing done automatically, not dealing with 'paper vouchers'):-

1. Talk to the voucher company. They know everyone has a first time, and it's in their interests to help you have a hassle-free experience. They do a highly unspecialised job (taking money from one account and putting it in another - not exactly mind taxing stuff ) so they've already worked out that they only compete with one another on who can offer the best customer service. They'll also be able to tell you what details you need to give the client in order to pay you. Again this differs from one CV provider to another. It can be a unique reference number or might be as simple as selecting your name/postcode from a drop-down list.

2. When you receive an email saying the vouchers have been transferred to your account, it does not mean the cash is in your bank yet. Since any delay in clearing is usually down to the recipient's bank, remember that part is not the parent's fault. It's up to the parent to get the vouchers into your voucher account by the due date, but the rest isn't her problem. You may wish to adjust her due payment date to allow for the sluggishness of your own particular bank (even their computers don't work weekends.) You can't say she's paid late if she has transferred the CVs but they haven't arrived in your bank account. If this is going to give you a cash-flow problem, then you must bring forward the contracted due date for payments. It is not enough to say some amateurish 80ll0ck5 about "cleared funds" - you are running a proper business, not flogging dodgy videos on eBay.

3. Check your settings. You should ask the voucher company to make sure their computer searches your account for vouchers and transfers them to your bank account every day. I know this sounds crazy, but a lot of CMs make the quite reasonable mistake of setting it to check once a month. That can mean waiting a whole month to get hold of the cash if the computer is 'looking for' a voucher payment the day before it arrives - because it won't start 'looking' again for a whole nother month. AFAIK this can happen with at only one of the voucher companies, but it's a PITA to find out the hard way.

4. Never, ever, ever refund a voucher payment in cash. Don't even consider it. Technically it's tax fraud and money laundering, which could have HMRC crawling all over you. If mum overpays by vouchers, then you can carry over the credit to the next bill or contact the voucher company to transfer the credit back into her voucher account. Tell her this. Tell her that you are giving her information, not entering into a discussion.

5. You are not responsible for how mum manages her voucher account. If she pays too much of her salary in and can't get it out: her problem, not yours.

6. Don't take any BS from mum about the voucher company delaying transactions. Parents sometimes try it on and say "oh I expect the voucher company gets delayed by the bank holiday", etc. I got my December vouchers credited on Boxing Day. In fact, they frequently draw down the money from the employer's payroll several days before the parent's due pay day. I tell my voucher-paying parents that I expect the credit on time and no arguments. First time they're late I'd issue a warning, second time and I refuse to accept anything but cash or BACS from the parents. They know the vouchers save them money, so none of them have messed me about so far.

And finally...........................Be aware, this is how it runs now. The UK regime is planning to phase in an alternative scheme with the exciting name of "Tax Free Childcare". This is supposed to run in parallel with CVs but a parent will only be allowed to run on one scheme or the other and not allowed to join or re-join a CV scheme if not already joined by the time TFC starts. The long-term aim is to eventually phase out CVs and put everyone on TFC. There is very little detail on this at the mo. Updates tend to appear on CV websites and Martin Lewis's Money Saving Expert site, but we're still waiting to see how it will all work out. I'm only saying this so you're aware it will eventually change, but just go with the stuff on CVs for now.

Hope this helps.

wow really good and details information there thank you for share and that answers another question i had on my mind.

[loocyloo]

I would suggest that any parent thinking about it, starts using vouchers by August!
The new 'tax free' system starts in September and then no one will be able to sign up for the current childcare vouchers and some people will be better off on the current system.
If a parent then finds out the new system would be better they can change, but once changed, they can't change back.