Claim your childcare vouchers
Only two in every 100 working parents have signed up for childcare vouchers, according to childcare voucher specialist, Childcare Choice - a benefit that could save up to £1,195 a year. Here is what you need to know about childcare vouchers.
What are childcare vouchers?
Childcare vouchers were introduced by the government in 2005 and are a cost effective way for parents to pay for childcare. The vouchers basically allow parents to pay for childcare from pre-tax income and cover childcare up to the age of 15. You can use them with any nursery, playgroup, nanny, childminder or au pair who is registered and regulated by Ofsted.
How do they work?
Childcare vouchers work by parents giving up some of their salary - up to a maximum of £55 a week or £243 a month - in exchange for the same value in vouchers. The sum you give up is exempt from income tax and National Insurance, which means you won't pay tax on up to £1,195 of your salary.
How much are they worth?
The scheme enables parents to save between £903 and £1,195 a year, depending on how much of your salary you sacrifice and whether you are a basic or higher rate tax payer. If both parents join the scheme, joint savings of nearly £2,400 can be made. Childcare vouchers also enable employers to save up to £370 per year for every employee on the scheme.
How can I claim childcare vouchers?
To get childcare vouchers, your employer must run a scheme so check with your human resources department to see if your company does. If your employer doesn’t, then it’s worth trying to persuade it to start. Firms can do voucher schemes two ways, either by operating it themselves or by using a voucher company to do all the administration for them.
Are there any downsides?
Getting childcare vouchers can impact your entitlement to tax credits although in most cases you will still be better off taking the vouchers. Also, if your child is looked after by a relative in the child’s home, you cannot use the vouchers to pay them.
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
A special government scheme operated through employers that allows you to pay for childcare from your PRE-tax salary. The vouchers cover childcare up to 1 September after your child’s 15th birthday (16th if they are disabled) and can be used at any registered and regulated nursery, playgroup and for nannies, childminders or au pairs.