All Mums and Dads are eligible for childcare vouchers, but many parents are missing out on huge savings simply because they aren’t aware childcare vouchers exist or they have a misconception that they are means-tested.

What can I use childcare vouchers for?

The vouchers cover childcare up to the age of 15, and can be used to pay
for any childcare that is registered and/or approved. Many parents don’t
realise that this covers not just nursery schools, playgroups, nannies and
childminders but also a wide range of summer classes, clubs and workshops
for older children. Other flexible aspects of the scheme are that vouchers
have a long expiry date, so can be saved up for times when parents know
childcare costs will be higher, such as the summer holidays.

How do they work?

Childcare vouchers by parents giving up some of their salary – up to
a maximum of £55 a week or £243 a month – in exchange for
the same value in vouchers. The sum you give is exempt from Income tax
and National Insurance, which means you won’t pay tax on up to £2,860
of your salary.

After April 2011, people paying higher and additional rates of tax who
join the voucher scheme will only be able to make the same tax savings
as those paying basic rate tax. In practice, this involves limiting the
amount of tax exempt vouchers that higher and additional rate tax payers
will be able to receive.

How much are they worth?

Working mums and dads who are 20 per cent tax payers can save £960
on childcare costs and 40 percent taxpayers will save in the region of
£1200 per year. If both parents join the scheme, joint savings of
nearly £2,400 can be made. Also employers can save up to £300
a year for every employee on the scheme.

How can I claim vouchers?

To get childcare vouchers your employer must run a scheme. This is a
simple process for them to set up which usually takes about 10 minutes.
If your employer doesn’t then it’s worth trying to persuade it to start.
Companies can do voucher shemes in two ways, either by operating it themselves
or by using a voucher company to do all the administration for them.

Any pitfalls?

You can’t use childcare vouchers to pay family members who look after
your child in your own home. Also claiming childcare vouchers may have
an impact on your entitlement to tax credits but in most cases it’s still
better off to take the vouchers.