Childcare Vouchers

Some employers offer childcare vouchers as a means of assisting with the costs of childcare. The employer will usually run the scheme with a voucher company who will issue you with vouchers either directly, or via your employer.

The vouchers are usually received as a ‘salary sacrifice’, which means that you will receive vouchers up to a certain amount and that amount will be deducted from your salary.

For basic rate taxpayers the first £55 you receive in vouchers is free from tax and National Insurance, so you could theoretically save up to £962 per year on childcare. If you are in the 40 or 50 per cent tax bracket, the threshold will be the £28 and £22 respectively.

All current users will continue to enjoy the same exemption and disregards beyond April 2011.

Each employed parent can use childcare vouchers, so a two-parent family could save double. The childcare you choose must be registered with Ofsted.

Further information

For more information on employer childcare vouchers and a copy of the ‘childcare vouchers for employees’ factsheet, please visit the Daycare Trust's website and follow the ‘Parent Information’ and ‘Paying for Childcare’ link.