CHILDCARE VOUCHERS

1
CHILDCARE VOUCHERS

• Major tax savings are available for employees and
  employers who use childcare vouchers to help to
  pay for professional childcare for employees
  children.

2
CHILDCARE VOUCHERS

• Who is eligible?
• What childcare is eligible?
• What tax exemptions are available?
• How much are the tax exemptions worth?
• What is the deadline for starting a scheme?

3
EMPLOYEE ELIGIBILITY

• Parent or step-parent of a child maintained at
  the employees expense or resident with the
  employee and for whom the employee has parental
  responsibility.
• All employees must be eligible.
• 2 or more people can be eligible in respect of
  the same child.

4
WHAT IS QUALIFYING CHILDCARE?

• Registered and approved childcare provided by
• Schools (out of core school hours)
• Local authorities
• Nurseries
• Domiciliary care workers

5
WHAT IS NOT QUALIFYING CHILDCARE?

• Childcare provided by a relative
• Childcare provided by a domestic partner
• Childcare provided by an unregistered or
  unapproved provider
• Education
• Care provided to a child aged over 15 at the
  start of the school year (16 for a disabled
  child)

6
WHAT TAX EXEMPTIONS ARE AVAILABLE?

• 55 per week of qualifying childcare can be
  provided free of tax and national insurance
• Only one exemption per parent regardless of the
  number of children

7
IS THERE A EASY WAY TO DO THIS?

• It is permissible to provide employees with
  childcare vouchers which they can redeem for
  qualifying childcare.
• The administrative costs of the voucher scheme
  are tax and NI exempt as well as the 55 per week.

8
HOW DO I MINIMISE THE COST?

• The best way to minimise the cost is for the
  employee to enter into a salary sacrifice
  arrangement
• They give up gross salary equivalent to the value
  of the vouchers they receive

9
HOW MUCH DO WE SAVE?

• The employer saves 366 per year.
• The employee saves 887 per year if a basic rate
  taxpayer.
• The employee saves 1,173 per year if a higher
  rate taxpayer.

10
WHATS THE CATCH?

• Employees need to be careful about the childcare
  element of tax credit claims in considering
  childcare vouchers.
• New schemes can only be set up before 2011
  according to a recent party conference
  announcement.
• So dont hang about!

11
WHAT DO I DO NOW?

• If you want to know more about the tax advantages
  of childcare vouchers, and would like an
  introduction to the provider of our vouchers,
  call Mark Simpson on 0161 886 8062