What are Childcare vouchers?
Childcare vouchers are a special government scheme operated through employers that allow you to pay for childcare from your Pre-tax & national insurance salary. It works by ‘salary sacrifice’ and the amount allowed is income-dependent.
How much can I save?
Basic rate tax payers (and higher/top rate payers who joined before 5 April 2011 as long as they don’t take a break from the scheme of more than 12 months) 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. The number of children you have has no impact.
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 limits are currently:
Basic (20%) Taxpayer. £55/week vouchers, max annual gain £930.
Higher (40%) Taxpayer. £28/week voucher, max annual gain £620.
Top (50%) Taxpayer. £22/week voucher, max annual gain £600.
The vouchers have a long expiry date but cannot be refunded usually. You can sign up to the scheme as soon as your child is born so that you can accumulate a little ‘deposit’ for when you go back to work.
Different NHS trusts use different schemes so speak to your HR department to find out how to set up an account.
You can buy more vouchers by setting up a direct debit from your bank account so that you can pay your childcare provider purely through the voucher scheme. This doesn’t save anymore money but just means they receive one sum from one source, keeping everything tidy!
What kind of childcare can I pay through the scheme?
They can be used until your child’s 15th birthday and can be paid to any childcare provider who is registered and regulated. This includes Nannys, childminders, nurseries, Au Pairs…..basically anyone apart from Granny! Most are registered and if they’re not, it’s best to avoid them anyway! Relatives looking after a child in the child’s own home cannot be paid the vouchers.
Does it affect my tax credits?
Childcare vouchers can affect your tax credits (childcare element of working tax credit) so check this out to ensure you’re making the best saving.
Remember that 3-4 year olds are entitiled to 16 hours free childcare per week which can be awarded through eligible Private nurseries.
It is worth considering this when choosing your nursery. It may seem far off when you return to work but if your chosen nursery does not take council funding you will either have to juggle school nursery with wrap around childcare or potentially miss out on up to around £200 a week of funding.
Moving nurseries at this point is always an option but it is amazing how attached your wee ones (and you) will become to a good nursery and it’s staff and changing nursery can be a huge upheaval.
Should I continue to pay childcare vouchers in the lead up to maternity leave?
No! As mentioned previously, your maternity pay is calculated from your national insurance contributions. Childcare vouchers are deducted pre-tax and so reduce your NI payment. It is cost effective to stop paying childcare vouchers for this period
http://www.nhsemployers.org/your-workforce/pay-and-reward/nhs-terms-and-conditions/junior-doctors-dentists-gp-registrars/less-than-full-time-training
