06.05.2008

Childcare vouchers using salary sacrifice.

Did you know that for every employee who purchases childcare vouchers using salary sacrifice they could save up to £53.97 tax and £27 NIC every month. Employers could also save £30.51 NIC every month.

Every employee with the responsibility for a child who needs childcare of some kind can have £55 per week or £243 per month.

This scheme must be open to all employees and the child must be cared for through registered or approved childcare.

Employers can pay for childcare by way of vouchers or they can pay the child carer directly.  Both of these methods can incorporate salary sacrifice, which means that the employer is no worse off and both employer and employee can save NIC.  The employee also saves PAYE because he takes the childcare payments out of his gross rather than his net pay.

Employers can offer the childcare payments as part of a flexible package, which may also assist with recruitment & retention of employees.  As its payable to both men and women and it is not just for executives, it can be a versatile component of any remuneration strategy.

If you haven’t already introduced this scheme, now is the time.  Once the initial setup has been done this scheme is not difficult to administer and can save everyone money.