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Childcare vouchers

At last - a bit of help with childcare

Childcare vouchers are a way of paying for childcare and getting a little bit of tax back on your earnings.
Not everyone gets them. It depends on your employers.

What are they?

If you work for a company that is part of the childcare vouchers scheme, then you could get some help with the cost of childcare. About a quarter of firms now offer these vouchers to their staff. Your employer will need you to take a reduction in your salary in exchange for vouchers that could be used for buying things for your child.

What's the benefit?

The good thing about childcare vouchers is it's not really a reduction in salary. The money you get in vouchers includes the money you would have paid in tax. So, in effect, you make some extra cash as you get some of your tax back. It's a particularly good deal for people on high salaries. The amount of money you save depends on how much tax you pay and what tax bracket you fall under. If you earn a lot and pay higher rate tax (40%) then you will get more money back than someone who pays basic rate tax (20%). The most you can get per week is £55 or £243 per month (£1,195 per year). However, if your partner is eligible you can double your allowance.
Do be aware, though, that a formal salary reduction agreed with your employer might affect your entitlement to working tax credit. It's best to check with the Inland Revenue first to see if you really would be better off with the vouchers.

What kind of childcare is covered?

There is a list of different types of childcare (and childcare qualifications) that are allowed so check you are happy with the choice of childcare available. According to the Daycare Trust the types of childcare that qualify for these vouchers are:

Childminders, nurseries and play schemes registered by Ofsted England, the Care Standards Inspectorate for Wales, the Scottish Commission for the Regulation of Care and the Health and Social Services Trust in Northern Ireland.
Out-of-hours clubs run by a school on their own premises, or by a local authority.
An approved foster-carer (the care must be for a child who is not the foster carer’s foster child).
In England only, a childcarer who is approved by Ofsted to care for your child or children in your own home – these are childminders who have further qualified to become ‘home childcarers’.
In England only, a childcarer approved under the childcare approval scheme.
In England only, childcare given in the child’s own home by a domiciliary worker or nurse from a registered agency that cares for the child or children.
In Scotland only, childcare given in the child’s own home by (or introduced through) childcare agencies, including sitter services and nanny agencies, which must be registered.