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Childcare Vouchers and Tax Credits - Will my tax credits be affected?
There are 2 ways the Government has of helping parents with registered childcare costs – the means tested route through Tax Credits or childcare vouchers. The specific part of Tax Credits which gives help with childcare costs is the ‘childcare element of Working Tax Credit’. Childcare vouchers are designed to help parents who are earning too much to get any help with childcare through Tax Credits. HMRC says a parent cannot get the childcare element of Working Tax Credit and childcare vouchers – it is one or the other. Parents need to check their Tax Credit award, or phone the Tax Credit Helpline 0845 300 3900, to find out if they are getting the ‘childcare element of Working Tax Credit’. If not then childcare vouchers would be of interest to them. For further information please contact Employers For Childcare on FREEPHONE 0800 028 3008 or go to: Tax Credits
Childcare Vouchers Eligibility - Can I get childcare vouchers for each child?
The £55 per week (£243 per month) exemption is per employee not per child of the employee
- Can both parents get childcare vouchers?
Yes, you can potentially double your savings, if both parents are able to get childcare vouchers through their employers
- Can I receive childcare vouchers for any child?
In order to benefit from the scheme you must
1. be the parent or legal guardian of the child(ren) or have parental responsibility, and
2. use registered childcare for your child(ren).
A child qualifies up to 1 September following their 15th birthday or 1 September following their 16th birthday if he or she is disabled.*Parental responsibility:
• A child of the employee maintained at the employee’s expense, or
• Is resident with the employee. Or
• Is a child in respect of whom the employee has all the rights, duties, powers, responsibility and authority, which by law a parent of a child has in relation to the child and the child’s propert
- Am I restricted to the type of childcare I choose by using childcare vouchers?
Childcare vouchers can be used to pay for all registered childcare including registered childminders, day nurseries, crèches and play-groups, after-school and breakfast clubs, holiday schemes and workplace nurseries. Childcare vouchers can be used to pay for more than one form of childcare, for example if you use different types of childcare for one child, and/or if you use different childcare providers for a number of children
- Are childcare vouchers means-tested?
No, childcare vouchers are not means-tested. They are open to all working parents if their employers have childcare voucher schemes in place
- I am self-employed. Can I use Childcare vouchers?
No, because:
• Childcare vouchers come under ‘employer supported childcare’ and self employed people do not have an employer
• self employed people pay a different class of National Insurance Contributions
• Self employed people make a tax return at the end of the year and pay a tax bill based on their earnings for that year. Their tax bill is therefore worked out retrospectively and childcare vouchers cannot be claimed retrospectivelyIf, however, a person has set up their own company and is then employed in that company they may be able to access childcare vouchers. Self employed people would need to check their personal circumstances with their accountant as it may be more tax efficient for them to be classed as self-employed. Self-employed people may be able to get help with childcare costs through Tax Credits. Contact the Tax Credits helpline 0845 300 3900
How childcare vouchers work - What does the term ‘salary sacrifice’ mean?
Under the Childcare Voucher Scheme employees may ‘sacrifice’ part of their pay in exchange for childcare vouchers, with the potential to save money on Tax and National Insurance Contributions
Maternity Pay - Will taking childcare vouchers affect enhanced maternity schemes?
If your employer offers an enhanced maternity benefit scheme, you would need to check with them whether their scheme will be affected if you take childcare vouchers. For example, if your employer offers 4 months full pay will ‘full pay’ mean your actual salary or salary minus the voucher amount. You should check with your employer
- Will entering the scheme affect Statutory Maternity Pay?
If an employee:
• is, or becomes, pregnant
• and are taking childcare vouchers through salary sacrifice
• and are only entitled to Statutory Maternity Pay (SMP)it is advisable that you opt out of the scheme 23 weeks (ie week 17 of the pregnancy) before the baby is due, and opt in again 15 weeks (ie week 25 of the pregnancy) before the baby is due. This 8 week period is known as the ‘qualifying or set’ period and earnings during this period will be used to determine SMP. SMP is currently 90% of average weekly earnings for the first 6 weeks of statutory maternity leave and then £112.75 for the remaining 33 weeks or 90% of the woman’s average weekly earnings, whichever is lesser.
Vouchers are not recognised as income during the ‘qualifying or set’ period so the lower earnings would be used to calculate your entitlement to SMP for the first 6 weeks
Online Childcare Search Facility - Is your setting on the on-line database?
One of the main services of Employers For childcare is our Advice & Information Helpline (0800 028 3008) which provides a free, confidential, personal Childcare information Service to parents on childcare and work related issues. Twice yearly we get information from Social Services on all registered settings in NI, which we have put onto a database online, parents can then either phone us or search online to find out what settings are available in their area. We have populated the fields using the information you provided on a questionnaire we send to you. Please check these details and if you wish to edit or update please feel free to call us on 0800 028 3008.
Opting Out - What happens if I join the scheme and then decide I do not want to receive vouchers anymore?
If you wish to opt out of the scheme at the end of the Variation of contract period simply do not complete a further Vary Terms and Conditions of Employment Opting In form.If you wish to opt out of the scheme before the agreed duration period ends you may do so as long as you provide your employer, with 1 months advance written notice, in the form of an opting out form
Paying and Registering Childcare Providers - Will my childcare provider accept vouchers as payment?
Childcare providers are not obliged to accept vouchers, however most childcare providers are familiar with childcare vouchers and will readily accept them. Employers For Childcare can provide childcare provider information packs and helpline support - 0800 028 3008 if your childcare provider has any queries
- How does my childcare provider get registered for childcare vouchers?
Your childcare provider may already be registered with us. If not we will supply you with a childcare provider registration form.It is your responsibility to contact your childcare provider(s) and ask if they are prepared to accept vouchers. If they have any doubts about the scheme they can contact Employers For Childcare Vouchers directly on 0800 028 3008
- My childcare provider is already registered for Employers For Childcare Vouchers. Do I still need to complete the childcare provider registration form?
If your childcare provider already accepts Employers For Childcare vouchers there is no need for them to complete another Childcare Provider Agreement form
Pensions - Will my pension be affected?
Occupational Pension Scheme
Under an occupational pension scheme an employer has the right to decide themselves whether or not the value of childcare vouchers is pensionable, subject to the pension scheme regulations. There are no HMRC regulations which stipulate that the value of childcare vouchers should, or should not, be regarded as pensionable for occupational pension schemes. You should check with your employer
Savings - How much could I save under the scheme?
Examples of savings* with childcare vouchersParent decides to sacrifice the following amount in exchange for childcare vouchers
Based on a rate of 33% you could save up to
Based on a rate of 31.4% you could save up to
Based on a rate of 41% you could save up to
£55 per week £17.05 per week £16.17% per week £22.55 per week
£243 per month (£55 per week equivalent) £75.33 per month £71.44 per month £99.63 per month *Actual savings will depend on personal circumstance
- Is there a limit to the amount of vouchers I can purchase?
The first £55 per week of childcare vouchers you purchase is exempt from Tax and NIC. The £55 per week exemption is per employee not per child of the employee, therefore both parents can purchase childcare vouchers and potentially make a double saving.
Vouchers may still be purchased in excess of this but will be subject to Tax and NIC, AND SUBJECT TO EMPLOYER’S TERMS AND CONDITIONS. The amount of vouchers you are able to purchase may be limited to ensure your gross monthly salary does not fall below £435 (NIC Earnings Threshold 2007/08) and the National Minimum Wag
Sick Pay - Will entering the scheme affect Statutory Sick Pay?
Statutory Sick PayIf you were in the scheme and went onto statutory sick pay, receiving vouchers may reduce your salary below the National Insurance Lower Earnings Limit. Therefore if you go onto minimum statutory sick pay it is advisable that you opt out of the scheme. This should not normally be an issue for short term sick leave but is something you should be aware of for longer term sick leave
What are childcare vouchers? - What does the term ‘salary sacrifice’ mean?
Under the Childcare Voucher Scheme employees may ‘sacrifice’ part of their pay in exchange for childcare vouchers, with the potential to save money on Tax and National Insurance Contributions
- What are childcare vouchers?
Childcare vouchers are a legitimate method of paying for registered childcare. Vouchers, up to a value of £55 per week, (£243 per month) are exempt from Tax and National Insurance Contributions (NIC
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