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Childcare Vouchers

On 6th April 2005, the Government made a number of changes that enabled more parents to take advantage of tax breaks on employer supported childcare. Gordon Brown’s revisions for the 2006-2007 tax year have increased these amounts to £55 per week or £243 per month. This means a significant saving per parent for the 2006 tax year of up to £962.28 per year for a 22% taxpayer and £1195.56 per year for a 40% tax payer. Remember this is per parent so effectively can be claimed twice for a two parent family.

Your Employers can offer you support in childcare costs in two ways:

  1. By providing childcare vouchers
  2. By directly paying your registered provider e.g.: nursery
Type of Benefit Before April 6th 05 After April 6th 06
Childcare vouchers Free from NI for employers and employees First £55 per week is free from TAX and NI for employees and free from NI for employer
Direct to nursery Free from NI for employers and employees First £55 per week is free from TAX and NI for employees and free from NI for employer

How do childcare vouchers or direct to nursery payments save me money?

From 6th April 2006, childcare vouchers or payments direct to nursery (up to a limit of £55 per week, or £243 a month) are exempt from tax and national insurance contributions. You will only pay tax and national insurance on the reduced level of your salary. This effectively saves you money on childcare costs. For a 22% tax payer this is approximate £962.28 per year, and for40% tax payers this is £1195.56. Remember this allowance is per person, so effectively you will save double.

How does a childcare voucher scheme work?

Your employer will normally run a scheme with the help of 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. Your standing order is amended for a lesser amount and on receipt each month you use your childcare vouchers to ‘pay’ nursery. Nursery, then redeem the value of the voucher direct from the childcare voucher company, by direct payment.

How does direct to nursery work?

Your employer contacts us directly and sets up a direct debit mandate to our account for your agreed amount. Your standing order is amended accordingly and your employer will receive a monthly invoice confirming payment on your account.

Who are we registered with?

If your employer would prefer to use a voucher scheme we currently have accounts set up with the following voucher organisations:

Please contact your nursery manager directly for the appropriate Registration Number.

Below are the childcare voucher companies that we are currently using and registered with however if your employer is using a different company please speak to a member of the team within the office and they will take the relevant details from you so that we can also register with them.

  • Accor Services
  • Care 4
  • Family Matters
  • Busy Bees

This really is a simple and easy tax benefit for you to claim. Talk to your employers and outline the benefits for both parties and stress their savings of 10% national insurance contributions on your behalf.