FIS: Childcare Vouchers

What are Childcare Vouchers?

Childcare Vouchers are a means of paying for childcare – they are one of the ways in which an employer can help employees with childcare costs. Your employer must be registered for this scheme. Childcare Vouchers are also known as Employer Supported Childcare.

How much can I receive in Vouchers?

You can sacrifice up to £55 per week or £243 per month from your salary which is then used to help pay towards your childcare costs. You then pay a reduced amount of Tax and National Insurance Contributions (NIC).

How does the scheme work?

  • Your contract of employment will need an amendment to say that you are sacrificing part of your salary. When sacrificing part of your salary, your earnings cannot fall below the national minimum wage.
  • You will receive a voucher from your employer for the same amount of money that you have sacrificed.
  • You then use the voucher to pay for all or part of your childcare.
  • Your employer recalculates your Tax and NI Contributions as you will now be paying a reduced amount.
  • Savings could be up to £962 per year for a low level tax payer or up to £1,195 for a high level tax payer.

How will I receive the Childcare Vouchers?

There are usually two ways in which to receive your vouchers. There is no monetary difference between the two.

Paper Childcare Vouchers

The paper vouchers can be used to pay your childcare provider - just like cash. You will be sent your vouchers to your home address on the dates decided by your employer - you can then pay your childcare provider by simply passing the vouchers to them.

Electronic Childcare Vouchers

The electronic Childcare Vouchers scheme is a secure internet and telephone service - no paper vouchers, just an electronic account that helps you manage the payment to your childcare provider. You will be sent a membership card with your account details and a letter explaining how to proceed. This will allow you to access your account.

You will need to discuss with your employer’s chosen Childcare Voucher company which is best for you.

How old does my child need to be?

A child qualifies from birth up to 1st September following their 15th birthday or, if the child is disabled, from birth up to 1st September following their 16th birthday.

What if I have more than one child?

The allowance is up to £55 per week or £243 per month in total for each parent. If you have more than one child the allowance remains at £55 per week or £243 per month.

My partner’s employer also offers Childcare Vouchers – can we both make the saving?

More than one parent can take up the scheme if each employer is registered for the scheme. It is an individual entitlement and so, double the saving can be made.

I am self employed can I still use Childcare Vouchers?

If you are self employed, you can use Childcare Vouchers providing that you pay yourself a salary paying Tax and NI Contributions (PAYE pay as you earn). A parent who is self employed and pays tax at the end of the year cannot use Childcare Vouchers.

Can I use Childcare Vouchers for more than one childcare provider?

You can use Childcare Vouchers for more than one provider as often families will need to combine different types of care.

I am interested, what do I do now?

  • If you are employed you must approach your employer to find out if they are already registered for Childcare Vouchers or whether they are willing to take part in a salary sacrifice scheme.
  • If you are self employed and paying PAYE Tax then you should approach a Childcare Voucher company directly. Wirral’s Family Information Service (FIS) can provide you with a list of Childcare Voucher companies.
  • Make sure that the childcare provider you want to use will accept Childcare Vouchers as payment, and that they are willing to register with the same Childcare Voucher company as your employer.

Things to consider

Taking part in the Childcare Voucher scheme (salary sacrifice scheme) can affect your pension, as you are in effect, earning less money. This is not always the case; you need to check with your personnel or HR department.

Generally, families who are receiving Tax Credits at a level greater than the Family Element will not gain from the Tax and NI savings that can be made from using Childcare Vouchers. You can find out if you would be better off by telephoning the HMRC Tax Credit helpline on 0845 3003900.

Information for your employer

If your employer is not in the scheme and you need information to send to them, please phone us and we will send out some information for your employer to read.