Understanding Child Care Vouchers with Green & Peter... Child care vouchers are vouches from your employer that can save many parents with children aged up to 15 over £1,000 a year on childcare.

1. Understanding
Child Care Vouchers
with Green & Peter

2. What are Child Care Vouchers?
Child care vouchers are vouches from your employer that can
save many parents with children aged up to 15 over £1,000 a
year on childcare.
With child care vouchers you pay for child care out of your
PRE-TAX and National Insurance income.

3. How Does it Work?
Some employers may simply give you the vouchers on top
of your normal salary, but most will ask you to do a 'salary
sacrifice', which, if you're on basic-rate tax, works
something like this…
You give up £1,000 of salary... ...but after tax & NI that's
only worth around £700 in your pocket. In return, you get
£1,000 of vouchers... ...so you're £300 better off.

4. How Many Vouchers Can You Buy?
Basic-rate taxpayers can pay for up to £243 of child care with vouchers each
month. This is PER PARENT, so two working parents could get £486 of
vouchers each month.
The limits from April 2014 are:
Basic (20%) taxpayer: £55/week voucher, max annual tax saving £930.
Higher (40%) taxpayer: £28/week voucher, max annual tax saving £630.
Top rate (45%) taxpayer: £25/week voucher, max annual tax saving £590.
The number of children you have doesn't affect the limits.
Vouchers last a long time but are non-refundable. You can save vouchers for
a period when you know your child care cost will be higher, for example,
summer holidays but be careful not to collect more than you can use.

5. What Counts as Child Care?
The vouchers cover child care up to 1 September after your child's 15th
birthday (their 16th birthday if they are disabled).
The provider must be regulated. Vouchers can be used by any registered
and regulated nursery, playgroup, nanny, child-minder or au pair.
You can also use child care vouchers for tuition for your child - as the
tutor is providing 'child care' at the same time as the tuition.
A relative looking after a child in the child's own home won't be eligible to
receive the vouchers. Yet vouchers can be claimed for carers that are
registered child-minders looking after a child in their own home.

6. Further Help With Child Care Costs
There are other schemes in place to help with child care
costs, including tax credits, holiday provision, and at least
15 hours' free child care each week (to be spread over at
least three days) for all three and four-year-olds before
they reach school starting age (term-time only).

7. Where to Get Vouchers From?
Any parent, or those with parental responsibility for a child living with them, is
eligible for the vouchers. Yet sadly, to get them, your employer must run a scheme.
Ask your employer if it runs a childcare voucher scheme.
Check with your HR department.
If you're a sole trader, you're not eligible as you're not classed as an employer.
What if your employer doesn't offer a scheme?
Providing childcare vouchers shouldn't cost your employer any money as they
don't pay National Insurance on the vouchers, it actually reduces their costs
significantly! So try to persuade them.

8. How can an employer begin a scheme?
Firms can either operate the scheme themselves or use one of the many voucher
companies to do all the admin for them. The fee for this should be less than the firm
gains in national insurance, so they'll still profit.
These providers include: Kiddivouchers (which donates at least 5% of all profits to
various charities) and Employers For Childcare (a not-for-profit organisation).
Many of these companies will also contact your employer if you ask them to.
Can my childless friend get vouchers for me through his work scheme?
You can only get childcare vouchers if you are the child’s parent or guardian. You'll
sign a declaration stating you understand this when you apply for the childcare
vouchers scheme.
So you're not allowed to get your childless friend to enter his employer's scheme
and buy the vouchers off him. It breaches the voucher scheme's terms and
conditions, and HMRC regards it as potential tax evasion.

9. Child Care Tax Credit: How do Vouchers Affect it?
While many people can save by using vouchers, they do come with two warnings
• They may reduce your pay
• They can affect other benefits
If you need to sacrifice some of your salary to get vouchers, this can have an impact
on other elements of your finances that depend on how much you earn - such as
pension contributions, maternity pay and more.
This is only likely to be a minor issue for most and easily overcome by the gain from
vouchers, but it's worth being aware of.

10. The Impact on Childcare Tax Credits
Tax Credits are a type of benefit and in many cases it can be a very significant
amount. The average pay-out is about £60 a week - over £3,000 a year.
For many people with children, getting childcare vouchers reduces your
eligibility for tax credits, potentially leaving you out of pocket because the
amount of tax credit you get depends on how much you pay IN CASH (ie, not
vouchers) for childcare. Here’s a simplified example...
The Joneses are entitled to 70% of their childcare costs in tax credits. Pay £100
in cash a week - they get £70 of tax credits. Pay £50 in cash and £50 in
vouchers (which they had to buy) and they’re only entitled to 70% of £50 paid
in cash, which is £35 of tax credits.
This means using childcare vouchers can reduce your tax credits, which means
some people are better off not getting vouchers at all.

11. Should you go for childcare vouchers or not?
If you're eligible for tax credits for then you're likely to be better off sticking with
ONLY tax credits and not getting vouchers.
There are a few circumstances in which you could still gain getting vouchers. For
example, if your childcare costs are above £175 a week for one child or £300 for
two or more children.
If you can't claim tax credits, then you'll ALWAYS be better off using vouchers to
pay for childcare.
Use the special childcare voucher calculator on the HMRC site which will
calculate if you're better or worse off taking the vouchers.

12. How will childcare vouchers change in 2015?
A new scheme, Tax-Free Childcare, will replace the existing voucher scheme in
autumn 2015. If you're already on the current scheme, you can stay on it until your
child reaches 15 (providing you don't move jobs). But, unlike childcare vouchers, it
will be open to all qualifying parents, not just people whose employer offers the
scheme.
Tax-Free Childcare will be open to single parents and couples who work 8+ hours a
week (including self-employed) and who pay for Ofsted-registered childcare for a
child under the age of 12 (or 16 if the child is disabled).
Under Tax-Free Childcare, eligible families will get 20% of their yearly childcare
costs paid for by the Government. This could mean up to £2,000 per child (the
scheme assumes a maximum of £10,000/year childcare costs per child).

13. Useful Numbers & Websites
Search for your nearest Family Information Service on the Daycare Trust website, which should be able to tell
you about what's available in your area - daycaretrust.org.uk
The HMRC website has a useful leaflet on Child Care Vouchers - www.hmrc.gov.uk/leaflets/ir115.pdf
Plus you can check on these official websites:
In England.
Go to the Ofsted website - www.ofsted.gov.uk
or call 0300 123 1231
In Wales.
Check the Care and Social Services Inspectorate website - cssiw.org.uk
In Scotland.
Go to the Care Inspectorate website - www.scswis.com
or call 0845 600 9527
In Northern Ireland.
Check the Department of Health, Social Services and Public Safety website - www.nidirect.gov.uk
or call 028 9052 0500

14. We hope this information has helped you further
understand Child Care Vouchers.
For all accounting needs please feel free to contact us
Green & Peter
Call: 020 8446 8100
Email: enquiries@greenandpeter.co.uk
Post: Green & Peter
The Limes
1339 High Road
Whetstone
N20 9HR
All information has been taken from Money Saving Expert www.moneysavingexpert.com/family/childcare-vouchers