Help For Working Parents
Childcare Vouchers offer a great way for helping working parents save up to £1,195 per year on childcare and up to double the amount if both parents are part of a Childcare Vouchers scheme.
If your employer gives you childcare vouchers, the
first £55 a week is free from both tax and NICs if the qualifying
conditions are met. Any associated childcare voucher administration
costs you pay are also exempt.
The qualifying conditions are that:
you can only use the childcare vouchers to pay for childcare that has been registered or approved;
The child : is a child or stepchild of the employee at whose expense, either in full or in part, the child is maintained; or
is resident with the employee and for whom the employee has parental responsibility;
qualifies up to 1 September after their 15th birthday (or 1st September after their 16th birthday if they are disabled).
Each parent can take vouchers if their respective employers offer the option, so both parents can enjoy these savings.
HMRC Guide for Employees : Getting help for Childcare costs from your Employer
HMRC Guide for Employers: Employer Supported Childcare
HMRC Guide for Childcarers : Employer Supported Childcare
The most important point to note is that the changes will affect only those who were not already participating in their employers childcare vouchers scheme at 5 April 2011. Everyone already participating by then will continue to enjoy tax relief at whatever is the employee's marginal rate, including those with a taxable income greater than £150,000 and therefore making them liable to additional rate tax at 50%.
New entrants to an employer's vouchers scheme on and after 6 April 2011 will be subject to a reduced maximum of tax-free vouchers. This maximum is at present £243 per month. For new participants
- whose estimated earnings and taxable benefits
exceed the sum of the personal allowance (£7,475 in 2011-12, £8,105 in 2012-13) and the
basic rate limit (£35,000 in 2011-12, £34,370 in 2012-13), ie a total of £42,475 (in both years), the maximum monthly amount in vouchers will
- whose estimated earnings and taxable
benefits exceed the additional (50%) rate limit, the maximum monthly
amount in vouchers will be £98
There are several companies that provide a childcare voucher service for employers. Some of them are: