Childcare Vouchers

If you give an employee (which might include you) childcare vouchers you / they can pay less tax.

But the gate is closing in April 2011. After that date the benefit is greatly reduced for higher rate taxpayers (and above), unless there is already a scheme in place. So getting a scheme in place before April 2011 will save you money into the future.

After that date you can still start a scheme and you will still save tax, but the amount you save will be reduced for higher rate (and above) tax payers. Assuming no further change in legislation.

How Does It Work?

You give your employee childcare vouchers instead of salary (salary sacrifice)

Your employee uses the vouchers to pay for services provided by an Ofstead registered organisation (a school?) For a service that is NOT part of the National Curriculum (a school trip? The boarding element of boarding school fees?)

Each parent can receive childcare vouchers from the same employer (you and your spouse / partner?)

The max value per employee is £55 per week. Or about £5,000 per annum for a couple. Tax free.

There are further terms and conditions, but it is simple and quick to set up.

If the employee receives the childcare element of tax credits they should probably not engage in the scheme. They will probably lose more than they gain.

You should get advice from a suitably qualified person before deciding what to do.

Please read our craftily worded disclaimer.