Hello Snowboarder, After reading your confusion about childcare vouchers, we hope that you will find the following information helpful. You?ll be pleased to hear that childcare voucher schemes are actually very simple, once you know the basics. The basics: What are childcare vouchers? Childcare vouchers are a Government scheme designed to help working parents afford high quality childcare. Childcare vouchers are simply vouchers that you can use to pay for childcare, such as for nurseries, nannies or childminders. They can even be used to pay for after-school care and holiday play-schemes. How do childcare voucher schemes help to save you money? The vouchers can be provided by your employer, and are usually received instead of part of your salary through a system known as ?Salary Sacrifice?. Unlike your salary, you don?t have to pay any tax or National Insurance on childcare vouchers. The saving in tax and National Insurance is worth around ?1,000 a year per parent; however, your savings will depend on the amount of tax and National Insurance that you normally pay. At the moment, you can receive childcare vouchers of up to ?55 a week (or ?243 a month) from your employer, however, after April 2011 higher-rate taxpayers will only be eligible to receive tax and National Insurance relief on up to ?28 a week (?124 a month) of childcare vouchers. This means, if you are a higher-rate taxpayer and you are interested in signing up to receive childcare vouchers, you need to join the scheme before April 2011 to ensure that you don?t miss out on higher savings. Are there any requirements for joining the scheme? You can only use childcare vouchers if your employer is willing to sign up for the scheme. This, however, is not usually a problem as childcare voucher schemes benefit employers too. By providing a childcare voucher scheme, your employer can save up to 12.8% of National Insurance Contributions, or ?373 per employee per year. The only requirements for joining the scheme are that you have an eligible child, and that you have enough salary to sacrifice without your remaining salary falling below the minimum wage. Can you start collecting childcare vouchers before you need them? As long as you have an eligible child, you can start receiving childcare vouchers and save them in your account for a time when you need them. They can be spent up to 1st September after the child?s 15th birthday (or 1st September after their 16th birthday if they are disabled). Will childcare vouchers affect your tax credits? Childcare vouchers can affect the amount of tax credits that you receive. If you are receiving more than ?45 a month in tax credits, we recommend that you check with HMRC before joining the scheme. How can you get started with childcare vouchers? You can usually sign up for childcare voucher schemes online, by phone, or by post. Registration for the scheme is very simple; it only takes 10 minutes and there?s no means-testing or claim forms. More information is available at www.kiddivouchers.com.
