what are childcare vouchers schemes?
The Childcare Voucher Scheme is a UK government initiative aimed at helping UK working parents to benefit from tax efficiencies in order to save money on childcare. The scheme is normally offered as a salary sacrifice scheme, which means that UK parents who are in the scheme are able to sacrifice part of their salary in order to obtain childcare vouchers (of an equal amount). In doing this the parents do not pay any tax or national insurance on the amount contributed to the childcare vouchers scheme up to specified limits. Due to this tax efficiency the childcare voucher scheme has limits in place, after which you would pay for childcare in the usual taxable fashion.
For example, a Parent given £55 per week (£243 per month) in Childcare Vouchers after taking a salary sacrifice of the same amount, will then benefit by saving up to £933 tax/NIC.
What can Childcare Vouchers be used for?
Childcare Vouchers can be used for childcare, au pairs, after school clubs, and any other registered childcare providers. Childcare providers should contact the relevant Childcare Voucher Providers in order to register with them and become a redeemer.
Who is eligible?
UK working parents are eligible. The scheme is not provided on a per child basis, but on a per person basis, so BOTH parents can claim under the scheme rules. The scheme can be available at the same time as working tax credits, however, this may not always be beneficial. It is possible to utilize a calculator to ensure that you are both going to save money, and to work out how much you might be able to save.
Childcare Vouchers are provided either by an employer, usually through a childcare voucher scheme provider that an employer chooses. If you would like to know if your company offers childcare vouchers scheme and who your childcare voucher scheme is provided by you should ask your Human Resources or payroll department who your provider is, or encourage them to sign up with a provider. There are many childcare voucher scheme providers available, many of whom offer extra benefits on top of the childcare voucher scheme.