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Employer Supported Childcare (Childcare Vouchers)

If you are working, you might get help with childcare costs through Employer Supported Childcare. It is up to your employer to decide whether they want to offer Employer Supported Childcare or not.

1. What is Employer Supported Childcare?

If you are working, you might get help with childcare costs through Employer Supported Childcare.  It is up to your employer to decide whether they want to offer Employer Supported Childcare or not.  There are three types of Employer Supported Childcare:

  • Workplace nurseries - where your employer has a nursery at your place of work;
  • Directly contracted childcare - where your employer arranges directly with a childcare provider to give you childcare;
  • Childcare vouchers - where your employer gives you vouchers that you can use to pay for your childcare.  You will either receive childcare vouchers in addition to your salary or you can choose to give up some of your salary to buy vouchers - this called salary sacrifice.  You can save tax and national insurance on the amount of the vouchers up to certain limits.

From early 2017, directly contracted childcare and childcare vouchers will be replaced by a new Tax Free Childcare scheme, see our Tax Free Childcare information page.  Workplace nurseries are not affected by the introduction of Tax Free Childcare. However, new claims for Employer Supported Childcare will be accepted up until October 2018.

Applies to: England, Wales, Scotland and Northern Ireland

Age rules: There are no specific age rules

Type of benefit: Non means tested

Taxable: No (as long as they are within certain limits)

Administered by: Your employer

 

Reviewed: June 2018

2. Can I get Employer Supported Childcare?

If you are working, and you are responsible for a child who is in registered or approved childcare (link opens in a new window), 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 for them.

 

Reviewed: August 2017

3. How much Employer Supported Childcare will I get?

The value of the vouchers reduces your gross salary (before tax and national insurance is deducted) so you make tax and national insurance savings if you get vouchers as part of your salary.

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 tax/national insurance exemption.

How much you can receive as childcare vouchers 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 (giving tax and national insurance savings of up to £933 a year).

  • Higher rate tax payer £28 per week (giving tax and national insurance savings of up to £625 a year).

  • Additional rate tax payer £25 per week (giving tax and national insurance savings of up to £621 a year).

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

Benefit Cap

Employer Supported Childcare is not included in the Benefit Cap which limits the total amount in some benefits that working-age people can receive. See our Benefit Cap information page for more details.

How will I be paid Employer Supported Childcare?

Childcare vouchers are normally provided through salary sacrifice. This means an employee gives up part of their salary in return for a non-cash benefit, for example you get vouchers instead of money as part of your salary.  This can affect entitlement to pensions and statutory pay so you should look into this before agreeing to change your contract to salary sacrifice.

Employer Supported Childcare and other benefits

You cannot claim for the same childcare costs through the Childcare element of Working Tax Credit and childcare vouchers. You must deduct the value of any childcare vouchers from your childcare costs when working out your childcare costs for tax credit purposes.

For example: If Katy's childcare costs are £150 a week for her son and she receives £55 a week in childcare vouchers, she will need to declare her childcare costs for Working Tax Credit as £95.  Katy would need to work out whether she is better off claiming vouchers or claiming all her support through tax credits.

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 Gov.uk website childcare cost calculator (link opens in a new window)  on the HM Revenue and Customs website.

If you get vouchers instead of money as part of your salary this could affect your entitlement to certain benefits. For example, your Tax Credits may be affected if the money you are paid falls below a certain level. Your rights to Basic State Pension, New State Pension, Maternity Allowance, Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay could also be affected as these are based on your National Insurance contributions.

 

Reviewed: August 2017

4. How do I claim Employer Supported Childcare?

You apply for Employer Supported Childcare through your employer. They will be able to tell you which voucher provider they use, or provide details of any subsidy or workplace nursery they may run.

Employer Supported Childcare is gradually being replaced by a new Tax Free Childcare scheme from early 2017, see our Tax Free Childcare information sheet., but new claims for directly contracted childcare and childcare vouchers will be accepted up until October 2018.

What documents will I need to claim Employer Supported Childcare?

The voucher provider will tell you what documents you need to provide. You will need the name and contact details of your childcare provider.

 

Reviewed: June 2018