Childcare vouchers are an employee benefit exempt from tax and National Insurance (NI)
Your employees can sacrifice up to £243† a month (£55 a week) of their gross salary for childcare vouchers. This portion of their salary will be exempt from tax and NI contributions, allowing each parent to save up to £933* a year, on their childcare costs.
They can be used to pay for all types of registered childcare
Parents can save money on all types of registered childcare for children up to 16^ years old. This includes:
- Day nurseries
- Au pairs
- Out of school clubs
- Holiday schemes
- Activity clubs
- Qualifying Childcare offered by schools.
Childcare vouchers can help your company save money too!
Childcare vouchers are also NI exempt for employers. This means you can save up to £402** a year in reduced NI contributions for each participating employee.
They are an established Government initiative to support working parents
Launched in 1998, childcare vouchers are a scheme run by HM Revenue & Customs (HMRC).
You can run the childcare voucher scheme ‘in house’!
You can run the childcare voucher scheme ‘in house’, so you can pocket the employers NI saving. There are lots of companies offering to run the scheme for you if you would prefer (for a fee), but it is quite a simple process to run it yourself and we can fully advise you on this.
†For parents joining a scheme from 6 April 2011, the Government has capped the amount of childcare vouchers a tax-payer can request each month to £243 for a Basic rate tax-payer, £124 for a Higher rate tax-payer and £110 for an Additional rate tax-payer.
*Figures quoted are the maximum available savings for a Basic rate tax-payer. Higher and Additional rate tax-payers may save around £623 a year. The savings parents make will depend on their circumstances.
^1 September following 15th birthday or 1 September following 16th birthday for children who are registered disabled.
**Annual employer NI savings for a Basic rate tax-payer taking the full £243 voucher value. The maximum savings available will be less for Higher and Additional rate tax-payers.