Childcare vouchers play a vital role for employers as they endeavor to hold onto their skilled and experienced workforce and also cut costs. By introducing childcare voucher schemes employers can reap financial benefits.
Employers who provide childcare vouchers for employees can save up to 12.8% on National Insurance Contributions (on the value of the vouchers up to £55 per week). The more employees with nursery/crèche costs are encouraged to claim childcare vouchers; the greater the saving for your business.
Childcare vouchers allow working parents to save on registered childcare costs through their employer. By taking part of their salary in vouchers, rather than paying the child-minder or registered crèche directly from their net pay, a working parents' tax burden is reduced and their employers also save money - so it is a “win-win” situation for all involved.
Childcare vouchers are a flexible, legal method for working parents to pay for all forms of registered childcare including day nurseries, registered child-minders, crèches and playgroups, after-school and breakfast clubs, holiday schemes and workplace nurseries.
So How Do Childcare Vouchers Work?
The first £55 per week (£243 per month) of childcare vouchers that an employee receives through their payroll is exempt from income tax and national insurance contributions. This means that a parent paying basic rate tax could save up to £77 per month on registered childcare.
Couples who work for companies each offering the childcare voucher scheme are both entitled to claim up to £243 each per month of their salary as childcare vouchers. These joint tax exemptions could mean a family saving of as much as £154 per month on registered childcare costs.
Childcare voucher schemes are very easy to set up and put into practice. Due to the tax incentives involved childcare vouchers are a business investment, not an expense.
To find out more about childcare vouchers visit http://www.employersforchildcare.org
To find out how to set up Childcare Vouchers in BrightPay see http://www.brightpay.co.uk/docs/13-14/processing-payroll/childcare-vouchers/