Childcare vouchers

Childcare Vouchers offer a cost effective way in which employers are able to assist their staff with payments for childcare. This is achieved through the ‘salary sacrifice’ scheme, where payments are deducted through the wage packet and is a practical means of demonstrating work life balance practice to employees and providing actual cost benefits to both employer and employee on National Insurance Contributions.

HOW DOES IT WORK:
• Employer agreements – The employer makes an agreement with one of the National Childcare Voucher companies (some of which are identified at the bottom of this page).
• Employees order the vouchers from their employer using a pre – arranged system, for example, payroll. These are collated and sent off to the voucher company. The employer is invoiced for the total amount of childcare vouchers ordered and upon payment, the vouchers are released to the employees on a pre-arranged date to link in with the employers payroll system. The vouchers are then normally sent directly to the employee’s home address.
• Payroll then deducts the amount of vouchers from the employee’s pay. National Insurance Contributions are charged on the gross pay less the amount of vouchers.
• Vouchers are readily accepted by childcare providers, as it represents a cash payment. The voucher company reimburses the provider within 2 to 3 working days.
• Orders are usually made on a monthly basis to coincide with payroll. The amount ordered is adjusted as required by the employee.
• The vouchers are valid for a period of 12 months.

BENEFITS TO EMPLOYERS:
• Part of a company work life balance programme to enable parents to manage their work and home commitments.
• Vouchers are at no cost to the employer as increased administration is offset by their reduction in Employers’ National Insurance Contributions.
• Support and assistance from the voucher company with publicity and payroll.

BENEFITS TO PARENTS:
• Maximum savings on childcare costs through the pay packet.
• Savings of up to 11% on childcare costs.
• Easy to use.
• Childcare costs stopped directly from salary – guaranteeing payment.
• Effectively managing / budgeting for childcare costs.

DOWNLOADS
A leaflet entitled 'Save Money on your Childcare Costs Childcare Vouchers - Parent Factsheet' can be downloaded from http://www.cmb.org.uk