What are childcare vouchers
How does a childcare voucher scheme work?
How do childcare vouchers save me money?
What sort of childcare can they be used to pay for?
Can all nannies accept payment through CCV’s?
Getting your nanny registered for Vouchers
Child Tax Credit and Working Tax Credit
If you live in Scotland, please contact: Tinies Scotland
What are childcare vouchers?
Childcare vouchers are one of the ways in which employers can assist their employees with the costs of childcare. The first £55 per week in Childcare Vouchers supplied by the employer will be exempt from both tax and NIC’s for employees.
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How does a childcare voucher scheme work?
Your employer will normally sign up to a childcare voucher company and will pay that company an administration fee for their service. The voucher company will either supply you directly with your childcare vouchers or they will provide your employer with them, which they will distribute to staff accordingly. Employees in receipt of childcare vouchers may be able to use them to 'pay' their nanny or other registered forms of childcare. The nanny will then redeem the value of the voucher from the childcare voucher company, usually by direct payment into their bank account.
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How do childcare vouchers save me money?
Childcare vouchers can be offered to you in addition to your cash salary but are more commonly offered as a "salary sacrifice". This means that you sacrifice a specific amount of your salary and instead receive that amount in childcare vouchers. Childcare vouchers are exempt from National Insurance Contributions (NIC), so you will only pay NIC on the reduced level of your salary, saving up to 11% on NIC. This saves money on childcare costs.
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What sort of childcare can they be used to pay for?
Childcare vouchers can only be used for registered or approved childcare costs. Your nanny will need to be "registered" through the 'Ofsted Childcare Register' (OCR). Your nanny will also need to register with the voucher company in order to reimburse the value of the vouchers they receive.
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Can all nannies accept payment through childcare vouchers?
Yes as long as they are "registered" through the OCR scheme and they have a bank account. In order to receive the childcare voucher reimbursements the nanny will need to register their details with the childcare voucher company. This is usually a record of contact details, registration number where appropriate and bank account details. There is no cost to the nanny in receiving payment through childcare vouchers. Information packs explaining childcare voucher to nannies are available from most voucher companies.
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Getting your nanny "registered" for Vouchers
The nanny must apply to OFSTED for his/her application form. For more information about the scheme and contact details for Ofsted please follow the link www.ofsted.gov.uk.
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Child Tax Credit and Working Tax Credit
The Child Tax Credit (CTC) offers parents support with general family costs. Working Tax Credit (WTC) supports those on lower incomes and working parents may be eligible for additional help towards registered childcare costs. The amount of help parents receive will depend on a number of factors including their income, the size of their family and the amount they pay in childcare.
The receipt of childcare vouchers through a salary sacrifice scheme can affect parents’ entitlements to these tax credits in a number of ways, so it is best to check first. For more information on Tax Credits visit www.taxcredits.inlandrevenue.gov.uk or call 0845 300 3900.
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