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Childcare Voucher Scheme 

 

Index

You can read through this information sheet, or go directly to the sections you want to read by clicking on these links:

• Who does it help?
• What help does it provide?
• How much does it pay?
• How do I make a claim?
• What documents will I need?
• Further help

Who does it help?

If you are working, and you have children, your employer may offer help in the form of childcare vouchers. They do not have to offer this support, but if they do, they have to offer it to everyone who works there.

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What help does it provide?

The Childcare Voucher Scheme involves giving up some of your pay in exchange for childcare vouchers. This is called a salary sacrifice scheme.

Your employer can:

• pay directly towards a childcare service, such as a workplace nursery
• pay a subsidy to a registered provider outside of the workplace
• sell you a childcare voucher, usually via a childcare voucher company who they pay to administer the scheme.

Your employer then deducts the amount paid out in vouchers from your gross salary.

As the amount is taken from your salary before tax, you have tax advantages if you get vouchers instead of pay.

However, if you accept a cut in pay, this could affect your rights to certain benefits. For example, your Tax Credits may be affected if your pay falls below a certain level. Your rights to State Pension, Maternity Allowance, Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay could also be affected if your pay falls below a certain limit.

You cannot claim for childcare costs through the Childcare element of Working Tax Credit if you pay for childcare with childcare vouchers. If your employer offers you childcare vouchers and you want to know if you would be better off having the vouchers or claiming for help with childcare costs through Working Tax Credit, you can use the childcare cost calculator (link opens in a new window) on the HM Revenue and Customs website.

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How much does it pay?

There is no limit to the value of childcare vouchers an employer can supply. However, only a maximum of £55 a week counts towards the salary sacrifice scheme and tax/national insurance exemption.

How much you can get without having to pay tax or national insurance depends on what rate of tax you pay and when you joined the scheme. If you joined the scheme on or after 6 April 2011, the limits are:

• Basic rate tax payer         £55 per week
• Higher rate tax payer        £28 per week
• Additional rate tax payer   £22 per week

If you joined the scheme before 6 April 2011, the weekly limit remains at £55, whichever rate of tax you pay.

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How do I make a claim?

You apply for the Childcare Voucher Scheme through your employer.

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What documents will I need?

Your employer will tell you what documents you need to provide.

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This information has been produced by Citizens Advice. 

Last updated: 6 April 2012