Childcare Voucher Scheme - An Employers Guide
The rules surrounding Employer Supported Childcare schemes were changed in April 2005. As an employer, you are now able to provide your employees with up to £55 per week (£243 per month) in childcare vouchers.
With the first £55 a week free of Income Tax and National Insurance Contributions, employees paying tax at the basic rate could save up to £962 per annum. For employees in the higher tax band the savings are even greater; savings of up to £1196 per annum can be achieved. Ask your employees to use our Parent Savings Calculator to obtain their free personalised savings illustration.
By offering Childcare Vouchers to all of your employees through a Salary Sacrifice Scheme you can save up to 12.8% of the value of the Childcare Vouchers you provide your employees. Your savings can be quite substantial! For just one employee receiving the monthly maximum (£243) you could potentially save £373 per annum alone.
Choosing a Childcare Voucher Provider
There are many Childcare Voucher Providers dedicated to providing Childcare Voucher Schemes. Our directory of Childcare Voucher Providers will get you started by helping you identify who they are, and the types of Childcare Voucher Scheme they provide. Our research has shown employers tend to focus on how quickly a scheme can be set up, the costs involved and the level of ongoing administration required to operate the scheme efficiently.
Setting up a Childcare Voucher Scheme
Setting up a Childcare Voucher Scheme is both quick an easy given most Childcare Voucher Providers now offer online registration. If you prefer the more personal touch you will find some Childcare Voucher Providers have dedicated freephone telephone numbers for setup and administration. Either way a few minutes is all you will need to give your chosen Childcare Voucher Provider information pertaining to the size of your workforce, salary schedules and when you would like to scheme to begin.
A Childcare Voucher Scheme cannot be back dated. The sooner your scheme is setup, the sooner both you and your employees start saving. Use our Employer Savings Calculator to obtain your personalised savings illustration today.
Employee Registration
Once in place you will need to make your Childcare Voucher Scheme available to all your employees where the scheme is geographically available. Your Childcare Voucher Provider will send you all the necessary promotional material to assist you in promoting the scheme and you may find they will even contact your employees directly to advise them of the availability of the scheme and the possible savings available. Please check with your Childcare Voucher Provider.
Online or by telephone, your employees will have to register and provide their contact details, value of vouchers required, their name and date of birth of their children and the details of their Childcare Provider. If your employees are looking for a Childcare Provider in their local area we would suggest using Nurserysearch as with over 11,000 childcare providers listed on their website we are confident they will be able to help.
Payroll Adjustments
Once your employees have decided how much of their salary they would prefer to receive in the form of Childcare Vouchers they will need to agree to a Salary Sacrifice as you will be reducing the level of their salary by the value of the Childcare Vouchers. This adjustment will automatically reduce your National Insurance Contributions by as much as £373 per employee who has joined the Childcare Voucher Scheme.
Costs & Savings
The savings made from the reduction in your employer's National Insurance Contributions will always offset the fees charged by the Childcare Voucher Provider for administering the scheme; check with the Childcare Voucher Provider.