Employers NIC rise – the effect on Childcare Voucher

Many employers are concerned about the UK Government’s planned rise to Employers National Insurance Contributions (NIC). However, for those employers whose employees are currently using Childcare Vouchers this change will actually lead to increased savings.

In the autumn budget it was announced that, from 6 April 2025, the rate of Employers National Insurance Contributions (NICs) will increase from 13.8% to 15%. However, this change is not happening in isolation, the earnings threshold has also been lowered, meaning employers will pay NICs on employee earnings from £5,000 rather than the current £9,100 threshold.

In addition to this the National Living Wage will increase from £11.44 to £12.21 per hour, and the equivalent rise in the National Minimum Wage rates. There is also the rise in the rates of Statutory payments such as Statutory Maternity and Paternity Pay and Statutory Sick Pay. All these increases to employer costs are due to come into effect from April 2025.

Increased Childcare Voucher savings for employers.

The Childcare Voucher scheme is exempt from Income Tax and NIC therefore there is no Employers NIC to be paid on eligible amounts sacrificed by eligible employees. As a result of the increase, employers will save approximately an additional £35 per year for each employee who sacrifices the maximum of £243 per month in childcare vouchers.

Although this is only a modest additional saving it is worthy of note for those employers all across the UK who are supporting their employees through the provision of the salary sacrifice Childcare Voucher scheme.

For further information or to arrange an information session for your employees regarding all forms of support available towards their registered childcare costs, contact the Family Benefits Advice Service on 028 9267 8200 or email hello@employersforchildcare.org.