Childcare vouchers

Childcare Vouchers

Due to the rising costs in childcare a government childcare voucher scheme has been launched to help parents save money on the costs of childcare. However, although the Childcare Vouchers UK Scheme has now been in place for a period of time it is not proving to be very popular.

Are You Aware of Childcare Vouchers?

It appears that the reason for this is simply that parents are not really aware how Childcare Vouchers work and what benefits they can provide for them. To explain further, employers sign up to the scheme which then gives their employees the opportunity to request Childcare Vouchers as part of a Salary Sacrifice. The advantage of is that the Childcare Vouchers are Free from Tax and National Insurance and so as they are taken from your salary prior to deductions you will in effect be getting a little more for your money.
This also provides a benefit to the employer too on the same basis that tax and national insurance payments are a little lower.

Who Accepts Childcare Vouchers?

The vouchers can be used to pay for childcare ranging from:-
* Nurseries
* Nanny's
* Child Minders
* Au Pairs

Child Carers do need to be registered by Ofsted to receive the vouchers and if so they can receive the vouchers and redeem them either via the Employer or via the Voucher Company. The scheme is aimed to assist with care for children up until they reach their 16th Birthday, not just for Pre School children as many people seem to think.

This cover is obvioulsy for day to day care of your child whilst you are at work but it also does include:-
* Before School Clubs
* After School Clubs and
* Holiday Clubs

Working Tax Credits and Minimum Wage Households

There are some negative aspects to the scheme though, for example after the salary sacrifice has taken place, your remaining salary must not fall below minimum wage. Due to this some people may not even be eligible for the scheme and where parents are claiming working tax credits the introduction of the vouchers may actually result in the working tax credit lowering making them worse off than they were initially.
Before requesting to be part of the scheme it may well be a wise move to check first how this will affect you personally and ensure that this situation does not occur.

Another negative point from the employers point of view is that the scheme must stay in place for a set time period. If during this time the employee was to go (for example) onto maternity leave this may bring about a reduction in income and result in them falling under the minimum wage after the vouchers have been deducted. If this scenario occurs then the employer must make up the difference to ensure that after the deductions the employee is still above minimum wage. This is a good point for the employee, but a bad point for the employer.

Finally where the childcare providers are concerned any delay in processing of the vouchers may cause great problems especially if they are a smaller nursery or a child minder. So although the scheme in some respects could prove to be extremely beneficial, it does have its faults too. The best thing you can do is assess your own personal circumstances and establish if the childcare vouchers scheme would be good for you and your childcare provider.

To check if your childcare provider is regulated by Ofsted:-

In England
Contact Ofsted Tele: 0845 601 4771

In Wales
Contact Care Standards Inspectorate

In Scotland
Contact Care Commission

In Northern Ireland

Contact DHSSPS

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Updated on 29th February, 2012

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