Childcare vouchers are an employee benefit available to all eligible working parents
Launched in 1998, childcare vouchers are a scheme run by HM Revenue & Customs (HMRC).
They are a Government-approved, tax-efficient way of paying for childcare. If you join the scheme, you can exchange up to £243† a month (£55† a week) of your gross salary for childcare vouchers.
The part of your gross salary you exchange for childcare vouchers is tax-free and exempt from National Insurance contributions (NI). Because of this, you can make savings of up to £933* a parent, a year.
It doesn’t cost you anything to sign up for childcare vouchers and the scheme applies whatever rate of tax you pay. What’s more, both parents can request childcare vouchers, giving a potential family saving of £1,866** a year!
They can be used to pay for a wide variety of childcare
All registered childcare settings can accept childcare vouchers as a method of payment for children up to the age of 16^, including:
- Au pairs
- Out of school clubs (such as Explore Learning)
- Extra-curricular activities (such as music lessons)
- Breakfast and after-school clubs
- Holiday clubs or schemes
- Activity holiday companies including Camp Beaumont, Kings Camps and Supercamps
- Qualifying childcare offered by schools
†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. Parents who joined their employers childcare voucher scheme before 6 April 2011 can continue to request up to £243 a month (£55 a week) in childcare vouchers, regardless of their tax status, providing they remain in their employers’ scheme (i.e. they have received a childcare voucher in the last rolling 12 month period).
*Figures quoted are the maximum available savings for a Basic rate tax-payer. Higher and Additional rate tax-payers may save up to £623 a year. The savings you make will depend on your circumstances.
^1st September following 15th birthday or 1st September following 16th birthday for children who are registered disabled.
**Figures quoted relate to the maximum family savings, if both working parents are Basic rate tax-payers and use childcare vouchers. If both working parents are Higher or Additional rate tax-payers they may save up to £1,246 a year. The savings you make will depend on your circumstances.