Tax-efficient Benefits
Childcare Vouchers
- Childcare Vouchers can be used to pay registered childcare providers for a specified amount. They are generally operated through salary sacrifice or as part of a flexible benefits scheme, and may be paper or electronic.
- Points to be aware of...
- Where the scheme is via the salary sacrifice route, there are NI savings for both the employer and employee on the cost of the vouchers, although this needs to be approved by Inland Revenue.
- A salary sacrifice scheme may impact on company pension entitlements, so the rewritten employment contract may need to take this into account. There may also be an impact on state benefits (e.g. tax credits, state penions, statutory maternity pay) if contracted weekly earnings fall below the Lower Earnings Limit.
- From 6 April 2006, employees can receive up to £55 per week towards childcare costs free of both tax and National Insurance Contributions, as long as the money is going to an approved childcare provider (such as a registered nursery, pre-school, after-school/holiday club, childminder or nanny).
- Where can you get Childcare Vouchers?
- For more information, see the Inland Revenue website (pdf, 31Kb)
