What are Childcare Vouchers?
Childcare costs are a huge drain on the finances. Yet the little-known ‘Childcare Voucher' scheme can save you £1,000s on nursery fees or child minder costs every year.
It allows you to pay for childcare from your pre-tax income. While this mightn't sound a big deal, the impact is huge. For every £1,000 a basic rate taxpayer earns, after tax and national insurance is deducted, they only actually receive a little under £700 in their pay packet. By using childcare vouchers, the whole £1,000 pays for childcare so there's a £300 gain per £1,000 of childcare.
What counts as childcare?
The vouchers cover childcare up to the age of fifteen, and they are useable by any nursery, playgroup, nanny, childminder or au pair who is registered and regulated by Ofsted.
If you ask, most providers will simply tell you if they're registered, but there is an official way to check. In Wales simply go to the Care Standards Inspectorate|.
Those whose relatives look after a child ‘in the child's own home' won't be eligible to receive the vouchers unless the relative is a registered childminder looking after the child as part of their business.
Those with under-5s are entitled to free education.
As a separate note, all three and four year olds are entitled to an early education place for up to two years before they reach school starting age. This provides at least 12.5 hours a week childcare for 38 weeks a year. To check if your child qualifies have a look at the DirectGov site|.
Where do you get the vouchers from?
Any parent, or those with parental responsibly for a child living with them, is eligible for the vouchers. Yet sadly, to get them, your employer must run a scheme. Therefore follow these steps:
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Ask your employer if it runs a childcare voucher scheme. Check with your Human Resources/ Personnel department to see if yours does. Most big employers, such as Lloyds, Barclays and Sony offer the schemes. Many NHS Trusts and Ministry of Defence departments do too. Until 2006 teachers weren't allowed to use the vouchers, but thankfully that's now changed.
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What if your employer doesn't offer a scheme? Providing childcare vouchers shouldn't cost your employer any money. In fact as they don't pay National Insurance on the vouchers, it actually makes them serious money - £100s per employee!
Therefore, why not try and persuade them, perhaps chat to other parents and go as a group to request the facility. Feel free to print out this article to show them. Firms can offer voucher schemes one of two ways, either by operating the scheme themselves or by using one of the many voucher companies do all the admin for them. The fee for this should be less than the firm gains in national insurance, so they'll still profit.
There are many childcare voucher companies in the UK. The following list contains some of those companies. The list below is in no way an endorsement or recommendation of any particular company.
Accor Services
50 Vauxhall Bridge Road
London
SW1V 2RS
Tel: 020 7834 6666
www.accorservices.co.uk|
Busy Bees
The ROM Building
Eastern Avenue
Lichfield
Staffordshire
WS13 6RN
Tel: 0871 7337500 or 08000 430 860
www.busybees.com|
Care 4
Pennyroyal Court
Station Road
Tring,
Hertfordshire
HP23 5QZ
Tel: 01442 829400
www.care-4.co.uk|
Childcare Options Ltd
Hazel Grove PS
Chapel Street
Hazel Grove
Stockport
Cheshire
SK7 4JH
Tel: 0161 483 2209
Email: vouchers@btinternet.com|
website: www.vouchers4kids.com|
Family Matters
42 Wilbury Villas
Hove
East Sussex
BN3 2GD
Tel: 01273 777515
Web: www.familymatters.co.uk|
Kidsunlimited
Westhead
10 West Street
Alderley Edge
Cheshire
SK9 7EG
Tel: 0800 0326 777
www.kidsunlimited.co.uk|
Leapfrog Childcare Vouchers
Leapfrog Day Nurseries
Central Office
Second Avenue
Centrum 100
Burton upon Trent
Staffordshire
DE14 2WF
Tel: 0800 783 7624
www.leapfrogdaynurseries.co.uk|
Sodexho Pass
Unit 5 Albany Court
Albany Business Park
Frimley Road
Camberley
Surrey
GU16 7QR
Tel: 0800 328 7411
www.sodexhopass.co.uk|
How the vouchers work
A few very generous employers will simply give you the vouchers on top of your normal salary, but most will ask you to do what's called a 'salary sacrifice' for the vouchers.
How does salary sacrifice work?
You give up some of your salary in exchange for the same value in vouchers. Yet the tax and national insurance relief means for every £100 a basic rate taxpayer loses from their pay packet, they get £140 worth of vouchers back (and higher rate taxpayers get even more).
How many vouchers can you buy?
If your employer offers a scheme, either itself or through one of the voucher providers, you can pay for up to £243 a month of childcare with it. Do note this is ‘per parent' so for two working parents you could get £486 a month of vouchers. Yet the number of children you have doesn't impact this, the limits are the same whether you've one child or an entire Brady Bunch.
Are there any downsides?
Getting childcare vouchers can impact your entitlement to tax credits, though in the vast majority of cases you'll still gain. As a rough rule of thumb there's no problem using the vouchers if you only receive the basic £545 child tax credit.
There's more guidance at HM Revenue & Customs|. You'll also need to check how it would affect your pension contributions and any other benefits you may be receiving such as statutory maternity pay.
The size of the saving!
The savings are huge: a basic rate tax payer using the full allocation of childcare vouchers can save £70 per month. That's £860 over the course of a year. Higher rate taxpayers can save even more, and as it's one per adult, that means the biggest possible gain for a family is £2,332 a year! To find out how much you save there's a useful calculator at BusyBees|.
(Some of this content has been sourced from: www.moneysavingexpert.com| )