Childcare Vouchers
An employee benefit that can be offered as a standalone salary sacrifice benefit or through a flexible scheme, childcare vouchers are a tax-efficient way to cover childcare costs for an employee. They can agree to sacrifice up to £55 of gross pay per week or up to £243 a month for vouchers redeemable at any approved childcare provider.
The employee makes tax and national insurance (NI) savings and employers can save up to 12.8% on NI. But care must taken to ensure that the post-sacrifice salary does not fall below the minimum wage.
The vouchers can be used in full or part payment for a wide range of child care options including a workplace nursery, external nursery, crèche, nanny, au pair, child minder, holiday play schemes and after-school services. Childcare vouchers can only be used to pay for the care of children up to the age of 15 years (until 1 September following their 15th birthday) or the age of 16 years if they are disabled (until 1 September after their 16th birthday).
For the employee to benefit from the tax and NI exemption, the chosen provider must be registered or approved. Please note that childcare voucher schemes must be offered to all employees for the tax savings to apply.
Voucher scheme providers in the UK include:
- Childcare Vouchers Direct (from Accor Services UK Ltd)
- Childcare Choice (from Sodexho Pass)
- Fideliti
- Busy Bees
- Gemelli Childcare Vouchers
- Leap Frog Day Nurseries
Employers may wish to consider offering access to a childcare voucher scheme through a voluntary benefits programme on a salary sacrifice basis. It's also possible for individuals to lose or reduce their entitlement to other benefits, such as Child Tax Credits.