Childcare vouchers

By receiving a portion of your wage in childcare vouchers, you and your partner could save up to £1200 a year on childcare

If you are a basic rate tax player you can convert £243 a month of your salary into childcare vouchers

The money is taken out of your gross wage (before tax and NI contributions are taken) so will REDUCE THE OVERALL AMOUNT OF TAX YOU PAY

VERY HANDY when the average cost of childcare is over £5000 a year!

 

Need to know

  • You can claim childcare vouchers from the moment your child is born. They last until your child is 15 and the vouchers HAVE NO EXPIRY DATE
  • Vouchers are not PER CHILD. You can use vouchers for any Ofsted approved childcare, including Ofsted registered child minders, after school tuition and even holiday clubs
  • You can check if your childminder or activity is Ofsted registered by checking online or calling 0300 123 1231
  • High rate tax players can claim £124 worth of childcare vouchers a month
  • If you are eligible for Tax Credits (or Universal Credit) check out our box below
  • Being registered for childcare vouchers will SAVE your company money - up to £373 a year per scheme member! If your company don't currently offer a scheme, TELL THEM IT CAN SAVE THEM TOO!
  • If your company is not yet registered, you can give your details to a voucher provider and they will usually get in touch with your employer for you, and talk them through the registration process
  • Make sure you are getting all the benefits you are entitled to. If you and your partner both earn under £50,000 a year you will be eligible for Child Benefit. See below to find out whether tax credits might give you more than childcare vouchers
  • Childcare Vouchers will be replaced from 2017. BUT, if you want to, you will be able to stay on your current scheme for as long as you are with that employer 
 

***Changes to Childcare Vouchers***

From 2017 the following will change

  • The voucher scheme will be run by NS&I instead of via your employer
  • It will be open to self employed
  • You will be eligible if both you and your partner work and earn between £2420 and £150,000 a year and are not claiming tax credits.
  • It will be an online account you pay into, then the government adds to
  • For 80p of vouchers you buy the government will add 20p
  •  This is available for up £10,000 of childcare costs per child (you pay £8000, the government pays £2000)
  • There is no limit on how many children you can claim for
  • You will have to reconfirm you qualify every quater
 

Childcare voucher providers

 

Kiddivouchers


Why we like it:

  • gives 5% of its profits to charity
  • offers lots of other discounts
  • lowest admin fee for employers (3.5%)
  • lots of good background information

Watch out:

  • can be difficult to navigate the site

Busy Bees


Why we like it:

  • clear lay out on site
  • offers lots of other tax efficient schemes
  • offers emergency childcare
  • 5% added to voucher value when used at Busy Bees nurseries

Watch out:

  • slightly old fashioned site design

Childcare Vouchers


Why we like it:

  • easy to manage your own account online
  • good discounts scheme
  • provides helpline for families on ANY child related issue

Watch out:

  • site is a bit wordy

Employers for childcare


Why we like it:

  • gives ALL of its profits to charity
  • lots of helpful guides online

Watch out:

  • does not offer extra benefits

Tax Credits VS Childcare Vouchers

  • If you and your partner's joint income is under £65,000 you may qualify for Tax Credits
  • Claiming childcare vouchers can affect your eligibility for Tax Credits
  • Tax Credits are generally more generous than childcare vouchers with claimants getting as much as £60 a week
  • The HMRC has a useful calculator which will show you whether you are entitled to Tax Credits and whether you're better off with the credits or the childcare vouchers. This is a government form which takes about 5 minutes to fill out 
 

The inside track

  • Childcare vouchers taken from your gross salary may have an impact on pension contributions and maternity pay
  • If you go on maternity leave to have another baby you can convert company paid maternity pay for childcare vouchers
  • Most childcare voucher providers will let you backdate vouchers up to six months
  • Unfortunately if you are a sole trader you are not eligible for childcare vouchers. If you are self-employed, you CAN claim childcare vouchers IF you use a PAYE system
  • Childcare vouchers can be used to pay for extra Maths and English tuition through Explore Learning
  • Many childcare voucher providers have discounts off loads of child-related goodies, as well as special offers and vouchers
  • Care.com has a really useful calculator that shows you the average price for childcare in your area, it also links you to childminders in the area, many of whom are ofsted approved and will accept payment in Childcare Vouchers
  • Try not to leave a scheme joined pre April 2011 this may lose you money

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