Wise up to childcare vouchers

published 29 August 2008

Childcare costs can be "crippling", says Rosie Murray-West in the Daily Telegraph. Yet just 2% of working parents have signed up for childcare vouchers, a little-known government scheme introduced in 2005. One reason take-up is so low is that the potential savings are "so substantial" that many people don't think they're eligible, says Louise Barker of Sodexho Pass, which runs one of the schemes.

If your employer has a scheme in place, you can give up part of your monthly salary before tax and NI contributions and use the vouchers to pay your nursery, childminder or nanny, as long as they are Oftsted registered.

Employersforchildcare.org, which also runs a scheme, says that the first £243 a month of vouchers received through your payroll is exempt of income tax and NI, so you could save up to £75.33 a month as basic-rate taxpayers and £99.63 per month at the higher rate. Both parents can claim, so the maximum saving is £199.26 a month. If your employer doesn't offer the scheme, remind them they won't have to pay NI on the part of your salary taken as vouchers.