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 part of their salary will be exempt from tax and NI contributions, so each parent can save up to £933* a year, on their childcare costs.
They can be used to pay for all types of registered childcare
And they can be used for children up to 16^ years old:
- school holiday schemes and clubs
- activity holidays
- out of school clubs
- breakfast and after-school clubs
- nurseries, playgroups and crèches
- nannies and au pairs
Childcare vouchers can help your company save money too!
Childcare vouchers (along with cycle to work schemes and a few other benefits) were not affected by the Government's recent shake-up of salary sacrifice schemes
. They are also NI exempt for employers, which 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 run by HM Revenue & Customs (HMRC).
†For parents joining a scheme from 6 April 2011, the Government has capped the amount of childcare vouchers a taxpayer can request each month to £243 for a Basic rate taxpayer, £124 for a Higher rate taxpayer and £110 for an Additional rate taxpayer.
*Figures quoted are the maximum available savings for a Basic rate taxpayer. Higher and Additional rate taxpayers 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 taxpayer taking the full £243 voucher value. The maximum savings available will be less for Higher and Additional rate taxpayers.