Childcare Vouchers can be offered to you by your employer in addition to your salary but are more commonly offered as a "salary sacrifice". This means that you sacrifice a specific amount of your salary and receive that equivalent amount in childcare vouchers. This means you will only pay Tax and NIC on the reduced level of your salary. For more information on Childcare Vouchers visit www.daycaretrust.org.uk or contact us. The key is they enable you to pay for childcare out of your pre-tax and National Insurance income. While this doesn't sound much, the benefit is huge.It works by 'salary sacrifice'
A few very generous employers will simply give you the vouchers on top of your normal salary, but most will ask you to do what's called a 'salary sacrifice', which works something like this, you give up £1,000 of salary but after tax and National Insurance that is only worth about £700 in your pocket – so in return you get £1,000 of vouchers and you are £300 better off. For an accurate figure of savings look at calculators on Accor Services or Computershare Voucher Services. Yet always check first if you're eligible for tax credits.How many vouchers can you buy?
Basic rate tax payers (and higher/top rate payers who joined before 5 April 2011) can pay for up to £243 of childcare with vouchers each month (£55/week). This is per parent, so two working parents could get £486 a month of vouchers.
From 6 Apr 2011 new joiners paying higher or top rate tax had their allowance dropped so that all tax payers have roughly the same maximum tax gain. The new limits are:
Basic (20%) Taxpayer: £55/week vouchers, max annual gain £920.
Higher (40%) Taxpayer: £28/week voucher, max annual gain £610.
Top (50%) Taxpayer: £22/weekvoucher, max annual gain £590.
The number of children you have does not impact the amount you receive; the limits are the same whether you've one child or more. Vouchers are not specific to each child and have a long expiry date.
For more information Contact Us...
020 7639 5261
020 7639 5263