Childcare Vouchers
Childcare vouchers are a simple and practical way for employers to assist their employees with childcare costs while still meeting business needs.
WHAT CHILDCARE VOUCHERS DO
Childcare vouchers are a flexible and valid method for working parents to pay for all forms of registered childcare including day nurseries, registered childminders, crèches and playgroups, after-school and breakfast clubs, holiday schemes and workplace nurseries.
Childcare vouchers allow working mums and dads to save on registered childcare costs through their employer. However, employers can also reap financial benefits by introducing childcare voucher schemes, so it is a win-win situation for all involved. By taking part of their wages in vouchers, rather than paying the childminder etc directly from their net pay, working parents' tax burden is reduced and their employers also save money.
HOW CHILDCARE VOUCHERS WORK
The first £55 per week (£243 per month) of childcare vouchers that an employee receives through their payroll is exempt from income tax and national insurance contributions. This means that a working parent paying basic rate tax could save up to £89 per month on registered childcare (up to £99 per month if they are a higher rate tax payer.)
Couples who both work for employers with childcare voucher schemes in place are both entitled to take up to £243 each per month of their salary as childcare vouchers. These joint tax exemptions could mean a family saving of as much as £198 per month on registered childcare costs.
If you consider last week's 'Cost of a Child' survey from the London Victoria Friendly Society, which found that the cost of raising a child until the age of 21 is over £180,000 (with childcare the highest single cost, accounting for £49,000), any saving for working parents should be welcomed.
Companies that provide childcare vouchers for employees can save up to 12.8% on National Insurance Contributions (on the value of the vouchers up to £55 per week). The more employees using childcare vouchers, the greater the saving to the business.
SOME EXAMPLES OF HOW IT WORKS IN PRACTICE
Example of savings:
Individual employee receiving £243 per month in childcare vouchers
* Employee saves up to £99.63 per month (£1196 per annum)
* Employer could save up to £31.10 per month in NICs (£373 per annum)
10 employees each saving up to £243 per month in childcare vouchers
* Each employee saves up to £99.63 per month (£1196 per annum each)
* Employer could save up to £311 per month in NICs (£3732 per annum) in total
FIND OUT MORE
Childcare vouchers can play an important role for employers as they strive to hold onto their skilled and experienced workforce and cut costs. Childcare voucher schemes are extremely easy to set up and implement. Due to the tax incentives involved, childcare vouchers are really a business investment, not an expense. In fact, they were described by a delegate at Legal-island's Payroll Matters event earlier this year as, "an absolute no-brainer!"
To find out more about childcare vouchers contact Employers For Childcare on 028 9261 0661 or visit http://www.employersforchildcare.org