Childcare vouchers are an employee benefit that companies can offer their staff. Vouchers are either offered on top of an existing salary, or via a salary sacrifice scheme. They are tax and National Insurance exempt, which is how they can help save parents money.
For example, a parent using the scheme via salary sacrifice would reduce their salary by an agreed amount per year and that amount would instead be received in childcare vouchers. Tax and National Insurance would only be applied to the parent’s reduced salary, which could save them up to £933 per year.
You will not be able to start claiming childcare vouchers after 4 October 2018, so now is the time to check whether they could benefit your family.
Firstly, you would need to speak to your employer and find out if they are signed up to offer the scheme. The vouchers must be used for your own child, your stepchild, or a child who you have parental responsibility for and who lives with you. You can use your vouchers to pay for registered childcare for children under 16 years old (or under 17 if disabled).
Childcare vouchers won’t be available to new joiners after 4 October and will be replaced by Tax-Free Childcare. If you’re already using childcare vouchers on this date, you will be able to continue claiming if:
- you stay with the same employer
- your employer continues to offer the scheme
- your child is over the age criteria
You can use childcare vouchers at the same time as the 15 and 30 hours free childcare schemes for 2, 3 and 44-year-olds You can’t use childcare vouchers at the same time as Tax-Free Childcare, but you can find out which scheme would be of most beneficial for your family using the childcare calculator.