Backdating Childcare Vouchers explained

Childcare Voucher savings are based on an annual entitlement. Some employers allow staff who have not reached their annual entitlement to sacrifice more of their salary, Tax and National Insurance free, before the end of the tax year, to use at a later date.

Reminder: If you haven’t used all of your annual entitlement to Childcare Vouchers you may be able to save more money before the end of the tax year (5 April 2019) but time is running out!

What is backdating?

Backdating allows parents to retrospectively claim their full entitlement to Childcare Vouchers if they have joined the scheme part way through a year or if they have been salary sacrificing less than their full allowance per month (subject to the rules below).

For example, if you are a basic rate taxpayer you are allowed to sacrifice up to £243 per month, that’s up to £2,916 in the year to the end of March 2019. If you have been sacrificing £200 per month from April to January (totalling £2,000) you could, if eligible, sacrifice an additional £516 (£43 x 12 months) spread over the remaining two months of the tax year in addition to the £200 regular monthly sacrifice.

If your employer allows you to backdate then your salary deductions for the next two months will need to be amended through your payroll.

It’s important you speak to your employer now to find out if you can backdate your Childcare Vouchers for 2018/19 and, if so, what the process is as it could take some time to process your request. Remember backdating is allowed only at your employer’s discretion.

Backdating rules

  1. Your salary still cannot drop below the equivalent of the National Living Wage / National Minimum Wage for the number of hours worked in the relevant pay period.
  2. We recommend your salary does not drop below £988 per month once all deductions have been made, including Childcare Vouchers, otherwise you may not be making any savings on your income tax or NIC.
  3. You must have had parental responsibility throughout the period for which you are claiming Childcare Vouchers, though you don’t have to have incurred childcare costs.
  4. You must have been with your current employer during the period.

Depending on the length of the eligible period:

Basic rate tax payers can sacrifice a maximum of £2,916 to the end of March 2019.

Higher rate tax payers can sacrifice a maximum of £1,488 to the end of March 2019.

Additional rate tax payers can sacrifice a maximum of £1,320 to the end of March 2019.

Family Benefits Advice Service

If you have any questions about backdating, or Childcare Vouchers more generally, call our Family Benefits Advice Service for free, impartial and confidential advice on 028 9267 8200 (lines open Monday-Friday 8am-5pm).  Following changes to the Childcare Voucher scheme, we have created a ‘Back to Basics Guide to Childcare Vouchers’ – read the guide in full here.