How do employers save money through Childcare Vouchers?
The Childcare Voucher scheme is a tax and National Insurance exemption scheme which allows eligible employees to save money on their registered childcare costs, while also providing savings on National Insurance Contributions for their employers.
How do employers save money?
Employers save money by providing Childcare Vouchers to their employees, as they do not pay employer’s National Insurance Contributions on the portion of salary their employees have paid into their Childcare Voucher accounts.
From April 2022 there is an increase of 1.25% points in the rate of Employer National Insurance contributions, raising it from 13.8% to 15.05%. This will therefore increase the amount of money that employers save through offering the scheme.
How much can an employer save?
The amount an employer can save is dependent on the amount their employees sacrifice in Childcare Vouchers. Each eligible parent can sacrifice up to £243 (depending on their tax band) from their salary per month into their Childcare Voucher account.
This will give an employer saving of £402.27 per employee per year, rising to £438.70 per employee from April 2022 due to the increase in the NIC rate. The savings rates for the coming tax year are shown below:
|Employee Tax rate||20%||40%||45%|
|Employee maximum monthly childcare vouchers||£243||£124||£110|
|Maximum for an Employer 2022-2023||£438
From this saving, most employers pay a Childcare Voucher company, like Employers For Childcare, a small fee to administer the Childcare Voucher scheme on their behalf.
But aren’t Childcare Vouchers closed to new entrants?
The Government closed the Childcare Voucher scheme to new entrants only in October 2018. Employers can continue to provide the scheme to their employees who are already using it, but cannot accept any new employees to ‘join’ their scheme.
Find out more
If you are an employer who is interested in switching your Childcare Voucher provider to Employers For Childcare we would be delighted to offer a competitive quotation, tailored to your business. Get in touch by emailing firstname.lastname@example.org or call us on 028 9267 8200.