Childcare Vouchers

Childcare Vouchers offer a great way to support working parents by helping them save up to £1,195 per year on childcare.

 

Introduction

• Childcare vouchers can save many parents with kids aged up to 15 over £1,000 a year on childcare.

 

• It is only available via employers, but many large and small companies take part.

• The key is they enable you to pay for childcare out of your PRE-TAX and National Insurance income.

It works by 'salary sacrifice'

You give up £1,000 of salary

but after tax & NI that's worth approximately £700 in your pocket.

In return you get £1,000 of vouchers

so you're £300 per £1,000 better off.

 

How many vouchers can you buy?

Basic rate tax payers (and higher/top rate payers who joined before 5 April 2011) can pay for up to £243 of childcare with vouchers each month (£55/week). This is PER PARENT so two working parents could get £486 a month of vouchers

 

From 6 Apr 2011 new joiners paying higher or top rate tax had their allowance dropped so that all tax payers have roughly the same maximum tax gain. The new limits are:
Basic (20%) Taxpayer. £55/week vouchers, max annual gain £920.
Higher (40%) Taxpayer. £28/week voucher, max annual gain £610.
Top (50%) Taxpayer. £22/week voucher, max annual gain £590.

 

"Basic rate tax payers (and higher/top rate payers who joined before 5 April 2011) can pay for up to £243 of childcare with vouchers each month (£55/week).."