Childcare vouchers are a cost effective way whereby employers can assist staff with payment for their childcare. Using a salary sacrifice scheme, payment for the childcare vouchers is deducted from the salary before any taxes, providing genuine cost benefits to both employer and employee on National Insurance Contributions.
Self employed parents cannot claim childcare vouchers through their own business.
Childcare vouchers can be used to pay up to a maximum of 70% of total childcare costs (as of April 2011), however the vouchers can only be used to pay for childcare for children up to the age of 15.
Childcare tax credits are designed to help working parent/s afford high quality childcare while still gaining from dual incomes. The full title is the 'Childcare Element of Working Tax Credit', so the parent/s must be employed for more than 16 hours a week (full time) in order to be eligible.
Childcare tax credits are most commonly given to parent/s whose total household income from working full time is less than £42,000 a year, although some families earning more than this are still eligible.
Please note, using the childcare voucher scheme can affect the amount of childcare tax credit that can be claimed. Childcare tax credits can only be claimed for childcare costs after tax. Since the voucher scheme removes a portion of the salary before tax, childcare costs paid with them are not counted towards the tax credits.
For example, if the childcare costs for 1 week are £100, and £60 pounds are paid with childcare vouchers, then only £40 of the childcare costs will count towards tax credits.
Failure to notify HMRC that you are using childcare vouchers can result in a fine.
To see if you are eligible for childcare tax credits, call the tax credit helpline on 0345 300 3900 or use the HMRC tax credit calculator
Early Years Education Entitlement:
All 3 and 4 year olds in England and Wales are entitled to 15 hours a week (during school term times) of free Early Years Education with a registered provider.
Children become eligible for their funded hours at the start of the term following their third birthday.
Some 2 year old children are also eligible for funded hours. To find out if your child is eligible please contact your local council Early Years team or SureStart Children's Centre.
I am currently registered as a provider of the Early Years Entitlement for 3 and 4 year olds.