Benefits for Parents
- Save up to £933 per annum in Tax and National Insurance
- Double savings if both parents join the scheme - up to £1866 per annum
- Assists in managing family finances and reduces childcare costs
- Freedom to choose where and when you use the vouchers
- Childcare vouchers can be for as little as £10 per month and banked until required
- Use for child-minders, nannies, day nurseries, play schemes, pre-school, before/after school clubs, boarding fees, educational centers or holiday clubs
Basic Rate Tax Payer
|Max Allowance: £243/month|
|Max Annual Saving: £933|
Higher Rate Tax Payer
|Max Allowance: £124/month|
|Max Annual Saving: £625|
Additional Rate Tax Payer
|Max Allowance: £110/month|
|Max Annual Saving: £620|
Childcare Vouchers for Self Employed Parents
If you work for yourself and operate under a limited company whereby you are a Director of the company then you would benefit by using Childcare Vouchers. The Childcare Voucher Scheme does not work for the self employed parent as they do not pay tax under PAYE. Some smaller companies do run the scheme on an additional benefit basis which enables you to receive further income from the company in the form of Childcare Vouchers Tax and NI free (up to a maximum of £243 per month) and also the value of the vouchers and administration fees are a cost to the company and, therefore, set against the Corporation Tax.
About Childcare Vouchers
Since April 2006, companies have been able to offer employees up to £55 a week (or £243 a month) in childcare vouchers and can be provided Tax and NI FREE.This is also an efficient way of distributing company profits. If running the Scheme on a salary sacrifice basis each employee can save up to £625 a year for higher rate tax payers or up to £933 for basic rate tax payers.The company would also save 12.8% on employer’s National Insurance Contributions.
Salary Sacrifice Scheme
In a Salary Sacrifice Scheme, you reduce your existing salary in exchange for receiving childcare vouchers. A Salary Sacrifice Agreement is drawn up and the payroll is amended to reflect the change in salary. Salary Sacrifice Schemes need to be notified to the Inland Revenue.
Addition to Salary Scheme
In an “Addition to Salary” scheme, you can receive childcare vouchers on top of your normal salary. The vouchers can still be provided Tax and NI free. There is no need to seek Inland Revenue approval and providing the vouchers are kept within the prescribed limits (£55 a week or £243 a month), they do not have to be declared on P11Ds.