childcare vouchers explained
The following article includes information you may find useful to help you understand how childcare vouchers work and who they can help you pay for a timperley childminder services you may need.
What are childcare vouchers
The childcare voucher scheme involves salary sacrifice. Essentially you buy vouchers that you can then use to pay for childcare. The important part to remember is that you buy them from your pre-tax salary, so you do not pay tax on that part of your pay.
Who is eligible for childcare vouchers?
The scheme is run by employers so your employer must offer childcare vouchers in the workplace. Any working parent can qualify for the vouchers as long as the salary sacrifice does not take you under the National Living Wage or National Minimum Wage.
You can receive childcare vouchers up until the 1st of September following your child’s 15th birthday, or their 16th birthday if they are disabled.
How much are childcare vouchers worth
The value of vouchers you can buy each week, depending on your income tax status.
Basic rate taxpayers (who pay 20% tax) can purchase vouchers worth £55 per week, for a max annual tax/NI saving of £930.
Higher rate taxpayers (who pay 40% tax) can purchase vouchers worth £28 per week, for a max annual tax/NI saving of £630.
What is Tax Free Childcare
Tax Free Childcare (TFC) is the new scheme being rolled out to replace the Employer-Supported Childcare Voucher Scheme.
If you are not signed up for childcare vouchers by April you will only be able to apply for TFC.
If you have a choice, the best scheme for you will depend on your circumstances.
TFC is administered by the government rather than employers and one consequence is that self-employed people can also qualify.
Unlike childcare vouchers, both parents must be working (where they are together) in order to qualify. This means working the equivalent of at least 16 hours a week at the National Living Wage or higher. You must both earn under £100,000 to qualify.
The scheme is only applicable for most children up to the age of 12 and for children with disabilities up to 16.
We hope you find this article helpful to understand how childcare vouchers work. To find out more visit https://www.gov.uk/help-with-childcare-costs/childcare-vouchers
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