Can anyone explain laymans terms what happens? If i sacrifice 243 quid a month – how much will i get in vouchers for that? Or does it not work like that?

243. The benefit is that it comes of your wage before tax and NI.

243 is the gross amount you can take out and it costs you less because it is taken out before take – so depending on whether you are a 40% tax payer or a 22% tax payer it will cost you less than £243. I do it and use e vouchers it is very simple – even our Financial director does it. Not sure why more people don't – don belive it affects tax credits either.

it's a bit like the biketowork scheme – except you can't sell the kid after a year 🙁

For us it worked out we paid around £160 for £243 worth of vouchers.

you have to be careful where tax credits are concerned….my place gives 5% discount as well which is a benefit in kind so i made sure my ex got the vouchers. also if there's 2 of you, you both can claim to ensure you get the tax and n.i free bit.

Oh and your partner can do it too so the max it £486. Child care can be bl++dy expensive.

so will my pay packet be £243 light or more?

the vouchers come out of your salary at gross, you're then taxed on your salary so you save money

Your packet should be down by around £160 but you'll get £243 worth of vouchers to put towards your childcare.

Exactly what Loddrik said.

Using simple numbers to illustrate, and ignoring NI and the like:

Say you get paid £1000 a month. You get taxed at say 25%. You end up with £750 in your hand, from which you'd have to pay £243 childcare to your provider and have £507 left to spend.

With the voucher scheme, you get paid £1000 a month but opt to 'swap' £243 of pay for vouchers. So you are now paid £757 and £243 of vouchers which you can pass on to your provider. You then pay tax @25% on the £757 and end up with £567.75 in your hand, ie: about £60 better off IN THIS EXAMPLE (Loddrik's probably right on absolutes but it depends on your tax banding I think)

don belive it affects tax credits either.

Actually it does, as it reduces the amount of qualifying childcare used to calculate those. The bonus is that it also affects them in a positive sense, as the salary figure used to calculate your tax credits is your taxable pay, which is reduced by taking childcare vouchers.

Another plus is that as they are treated as a non cash benefit if you are a woman and go on maternity leave you still get them even if you're only on SMP. This is also the case if you are on long term sick and are being paid SSP.