Childcare Vouchers: What employers need to know

Operating a Childcare Voucher scheme

We administer the only Social Enterprise Childcare Voucher scheme in the UK which helped parents to save £2.6 million on childcare costs and employers to save a further £1.2 million through reduced National Insurance Contributions in 2023/24.

Childcare Vouchers are operated through salary sacrifice.  A salary sacrifice arrangement is an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit.

Under the Childcare Voucher scheme employees may ‘sacrifice’ part of their pay in exchange for Childcare Vouchers, to save money on tax and National Insurance Contributions. To avail of these savings employees can only use Childcare Vouchers to pay for registered childcare.  Depending on their tax band, parents can pay a maximum of £243 per month from their salary into their Childcare Voucher account.

In 2018 the Government closed the Childcare Voucher scheme to new entrants only.  Current users can continue to use Childcare Vouchers as long as they remain eligible provided they:

  1. Joined the scheme prior to 4 October 2018, and
  2. Make at least one salary sacrifice (more than £0) within each 52 week period, and
  3. Do not leave the scheme in order to use Tax-Free Childcare, and
  4. Do not change employer (if the employee tries to rejoin Childcare Vouchers AFTER moving to a new employer, they will be deemed a ‘new entrant’).

For more information on Childcare Vouchers, refer to our most Frequently Asked Questions, which are available here.

Can a new employee join your current Childcare Voucher scheme?

No. The scheme closed to new entrants on 4 October 2018. This means anyone not signed up to the scheme before 4 October. Therefore, those parents with first born babies born after this date, families not previously registered, and current users who change employer after 4 October are considered ‘new entrants’ and are unable to join the scheme.

If you have new employees who are parents, and who would like to find out if they are entitled to any other form of financial support with their childcare costs, our Family Benefits Advice Service can help. Contact our advisors on 028 9267 8200 for free, impartial and confidential advice.

Employers can continue to offer Childcare Vouchers to eligible staff.

Advice and information

For more Childcare Voucher employer information you can download our  Employer Guide to Salary Sacrifice and Employer Terms and Conditions guides.

If you require further information about Childcare Vouchers,  how to administer the scheme or to switch Childcare Voucher provider you can call our Business team on 028 9267 8200 or email hello@employersforchildcare.org. For more information for employers on Childcare Vouchers, click here.

If you would like guidance more broadly on childcare support for your employees, or how you can be a family friendly employer, call our Family Benefits Advice Service on 028 9267 8200.

 

Useful information on Childcare Vouchers

 

Chris Briggs from Employers For Childcare's Family Benefits Advice Service explains how both employers and their employees can maximise the financial savings they make through the Childcare Voucher scheme by 'backdating'. Chris explains the rules around backdating and signposts to where employers and parents can access further information.