Manage your Childcare Voucher account carefully

We’re reminding all parents of the importance of managing your Childcare Voucher account carefully – whether that’s ensuring you can remain eligible for the scheme, getting the most out of your savings, or taking care not to build up a balance you don’t anticipate needing to pay for childcare.

Stay eligible for Childcare Vouchers

Under the rules of the Childcare Voucher scheme, you must make at least one salary sacrifice payment into your Childcare Voucher account in each 52 week period to remain eligible.  The money must actually come out of your salary – it’s not enough simply to request a payment through your employer. This can be a particular issue for parents returning to work after a period of maternity leave, who may find they are no longer eligible for Childcare Vouchers if they have left it too late to restart payments into their account.

Basic Rate Taxpayers can sacrifice a maximum of £243 into your Childcare Voucher account each month. If you are sacrificing less than this, then it is worth checking if you should increase your payments – enabling you to save more on your registered childcare costs.

Don’t salary sacrifice more than you need

Equally, parents are encouraged not to build up a balance of Childcare Vouchers if you don’t anticipate needing them to pay for registered childcare – though many parents do save up additional Childcare Vouchers to help with paying for more childcare during school holidays.

Remember a Childcare Voucher account is not a bank or savings account – once you have sacrificed your salary through payroll, the money becomes Childcare Vouchers – it is no longer ‘salary’ or ‘cash’ and HMRC rules are clear that Childcare Vouchers can only be used to pay for registered childcare.

It is your responsibility as an employee to manage your Childcare Voucher account carefully and not to salary sacrifice more than you plan to use to pay for registered childcare.

Losing eligibility to Childcare Vouchers

As well as the 52 week rule mentioned above there are two other ways that you can lose eligibility to Childcare Vouchers.

If you are leaving your employer, you will no longer be eligible to pay into your Childcare Voucher account even if your new employer offers the scheme to employees.

In addition, if you or your partner start to use a Tax-Free Childcare account you have to stop your salary sacrifice and cannot return to the Childcare Voucher Scheme in the future

Further information

If you are considering changing to a different form of support for your childcare costs our Family Benefits Advice Service can be contacted on fbas@employersforchildcare.org and our library of information factsheets can be accessed on our website at www.employersforchildcare.org/parents/download-library/.