Childcare Vouchers
In April 2005 the Government reformed the Tax and National Insurance exemptions to support the National Childcare Strategy. The scheme means that companies can offer employees Childcare Vouchers as part of their salary TAX and NI FREE
Childcare Vouchers are a simple, flexible and effective way for companies to help their employees with their childcare costs. Companies can give employees up to £2,916 per annum tax free in childcare vouchers saving the company 12.8% Employers National Insurance Contribution on this figure and saving parents up to £1,195 per annum each in Tax and National Insurance.
What are childcare vouchers?
The vouchers have a monetary value that can be used to redeem against the cost of childcare making quality childcare more affordable.
What are the savings?
For Working Parents
- Up to £75 per month for basic rate tax payers and £100 for higher rate tax payers. Added bonus – savings for parents can be doubled if both parents take childcare vouchers.
For Companies
- Companies save 12.8% on Employers NIC on the vouchers less an admin. Fee from the voucher provider.
How does the scheme work?
The scheme works on a “Salary Sacrifice” basis which means the employee will give up some of their salary, which would have attracted tax - in exchange for the same value in vouchers which doesn’t.
What are the Government’s Rules?
The Scheme must be made available to all employees. Employees’ net pay after Salary Sacrifice must not go below the National Minimum Wage (NMW). Vouchers can be used for children up to the age of 15 (or 16 if disabled). The employee receiving the vouchers must be the parent, step-parent or legal guardian of the child. The vouchers must be used with childminders, nurseries, after school clubs or holiday clubs that are registered with Ofsted in England, CSIW in Wales, SCRC in Scotland or the HSC Trust in Northern Ireland.
Where can the vouchers be used?
Vouchers can be used with your current childcare providers including childminders, nannies, day nurseries, pre-school groups, breakfast and after school clubs, school holiday clubs – many parents save up vouchers throughout the year and use them at summer holiday clubs.
Benefits for Companies
In addition to the scheme being self financing it offers real advantages in staff retention and recruitment, increases staff morale and enhances the image of the company as a family friendly employer. It is also a great benefit for smaller businesses to offer their employees and save money and, with the right voucher partner such as Gemelli no additional hidden costs or administration.
Childcare Vouchers for Small Business owners?
As long as the business is a Limited Company Childcare Vouchers can be provided to the company Directors as an Addition to Salary benefit and be free from Tax and National Insurance which is an efficient way of distributing company profits.
So if you are either an employer or a working parent and you are not currently benefiting from the Childcare Voucher Scheme - contact your local provider Gemelli by using the simple form below.
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