How does the change to National Insurance affect Childcare Vouchers?
The rise in the National Insurance rate, taking effect from April 2022, while lowering the total take home pay for workers also has the effect of increasing the savings that parents make through using Childcare Vouchers to pay for their registered childcare costs.
From April 2022 the rate of National Insurance rises from 12% to 13.25%. Childcare Vouchers allow eligible parents to sacrifice up to £243 per month of their salary, tax and National Insurance exempt, to pay their childcare costs for children under 16 (17 for children with disabilities). This change therefore increases the maximum savings amount from £933 to £969 per year, per parent, meaning parents save more money on their childcare costs.
The Chancellor also announced that from July 2022 the threshold to start paying National Insurance will rise to £12,570. Whilst this could mean an overall saving for parents, those Childcare Voucher users earning £15,486 or less may see a reduction in their Childcare Voucher savings as some or all of their earnings will no longer be liable for National Insurance contributions.
The Childcare Voucher scheme is only accessible to those employees whose employer offers the scheme. Parents must be earning more than the National Living Wage. In some cases Childcare Vouchers can be claimed alongside Universal Credit or Tax Credits.
The Childcare Voucher scheme closed to new entrants in October 2018. Any parents currently in the scheme can continue to use it provided they make at least one salary sacrifice in every 52 week period and do not change employer. For those parents who are not eligible for Childcare Vouchers, other forms of financial support with registered childcare costs are available and our team can advise what is best for your family.
For more information on Childcare Vouchers refer to our website, or contact the Family Benefits Advice Service to ensure that you are receiving the best form of support towards your registered childcare costs freephone 0800 028 3008 or email email@example.com.