For Employees : Overview
Childcare vouchers are offered by exchanging a portion of your salary for
vouchers. By doing this you achieve a financial saving because the amount
received in childcare vouchers is exempt from tax and NI contributions.
What could this scheme offer you?
- Help towards your existing childcare fees
- Savings of up to £962 for low rate tax payers and savings of up to £1196 for
high rate tax payers
How does the scheme work?
Childcare vouchers are implemented by way of a salary sacrifice scheme. A salary
sacrifice happens when you agree to give up part of your cash pay due under your
contract of employment in exchange for childcare vouchers to the same value as
the cash sacrifice. The 'sacrifice' is acheived by you signing an agreement to
vary your terms and conditions relating to pay. You acheive the financial saving
because the amount of salary exchanged for vouchers is exempt from tax and NI
contribution.