Childcare vouchers

All Mums and Dads are eligible for childcare vouchers, but many parents are missing out on huge savings simply because they aren't aware childcare vouchers exist or they have a misconception that they are means-tested.

What can I use childcare vouchers for?

The vouchers cover childcare up to the age of 15, and can be used to pay for any childcare that is registered and/or approved. Many parents don't realise that this covers not just nursery schools, playgroups, nannies and childminders but also a wide range of summer classes, clubs and workshops for older children. Other flexible aspects of the scheme are that vouchers have a long expiry date, so can be saved up for times when parents know childcare costs will be higher, such as the summer holidays.

How do they work?

Childcare vouchers by parents giving up some of their salary - up to a maximum of £55 a week or £243 a month - in exchange for the same value in vouchers. The sum you give is exempt from Income tax and National Insurance, which means you won't pay tax on up to £2,860 of your salary.

How much are they worth?

Working mums and dads who are 20 per cent tax payers can save £960 on childcare costs and 40 percent taxpayers will save in the region of £1200 per year. If both parents join the scheme, joint savings of nearly £2,400 can be made. Also employers can save up to £300 a year for every employee on the scheme.

How can I claim vouchers?

To get childcare vouchers your employer must run a scheme. This is a simple process for them to set up which usually takes about 10 minutes. If your employer doesn't then it's worth trying to persuade it to start. Companies can do voucher shemes in two ways, either by operating it themselves or by using a voucher company to do all the administration for them such as kiddivouchers.com.

Any pitfalls?

You can't use childcare vouchers to pay family members who look after your child in your own home. Also claiming childcare vouchers may have an impact on your entitlement to tax credits but in most cases it's still better off to take the vouchers.

<<back to Money matters