An Employers Guide to Childcare Vouchers

Setting up a childcare voucher scheme has never been so easy. Follow our 'Five-Point-Plan' and both you and your employees could start saving today!

The rules surrounding employer supported childcare were changed in April 2005. As an employer, you are now able to provide your employees with up to £55 per week (£243 per month) in childcare vouchers. With the first £55 a week free of income tax and national insurance contributions, your employees subject to the basic rate of tax could save up to £962 per annum. For those on the higher rate savings of up to £1196 per annum can be achieved.

By offering vouchers to all of your employees where the scheme is available you can save up to 12.8% of the value of the vouchers you provide your employees. If one of your employees received the maximum childcare vouchers (£243 per month) you could potentially save £373 per annum!

Select a childcare voucher provider. There are many companies dedicated to providing childcare voucher schemes. Our childcare voucher providers matrix will help you identify who they are, and the types of scheme they provide. Experience has taught us employers tend to focus on how quickly a scheme can be set up, the costs involved and the level of ongoing administration required to operate a scheme efficiently. By no means therefore does it contain an exhaustive list of the features of each scheme.

Setting up a childcare voucher scheme. A short process in itself given the advent of modern technology. Online registration is quick an efficient but if you prefer a more personal touch opt for telephone registration - some providers even have freephone numbers. In either case it shouldn't take you too long to give the childcare voucher provider your details, the number of employees, frequency of their pay, date of pay and when you would like the scheme to start. Remember a scheme cannot be back dated so the sooner you setup your scheme the sooner both you and your employees will save money.

Promote the scheme and register your employees. Once in place you will need to make your childcare voucher scheme available to all your employees where the scheme is in operation. Your voucher provider will usually send you all the necessary promotional material to assist you in promoting the scheme. You may find they will even contact your employees directly to advise them of the availability of the scheme and the possible savings available - check with your provider. Again, either online or by telephone, your employees will need to register and provide their contact details, value of vouchers required, name and date of birth of their children and the details of their childcare provider. If your employees are looking for a childcare provider in their local area we would suggest using Nurserysearch

Payroll Adjustment. Once your employees have decided how much of their salary they would prefer to receive in the form of vouchers you will need to reduce the level of their salary. This adjustment will automatically reduce your national insurance contributions as an employer of as much as £373 per employee (who is a member of the scheme).

Begin Saving. The savings made from the reduction in your employer's national insurance contributions will more than offset the fee charged by the childcare voucher provider for administering your scheme.