Paying for Easter kids clubs with childcare vouchers
I have been using childcare vouchers from my employer and Sodexo, a voucher scheme administrator, for 11 years now. I don’t get childcare tax credits, so this is the next best thing for me.
This year’s budget has introduced some changes, but don’t come into play till next year, so till then I will use my voucher entitlement.
I don’t pay tax or NI on childcare vouchers, so that’s a huge plus.
As the kids grow up, childcare costs have decreased, but I still use holiday clubs and after school clubs and the ones I use accept vouchers. Even in teen holiday clubs, they are accepted!
Childcare vouchers are a salary sacrifice scheme. You need an employer that offers the scheme, and your childcare provider has to accept vouchers for it to work. If you are a sole trader, you can have them too.
I do a sort of pay-as-you go scheme as I pay for childcare per half term, so once I get my bill, I get my Sodexo account topped up and pay within a few days. For holiday clubs, I sacrifice only the salary I need to cover the cost of the clubs. I have a very understanding employer, so this isn’t the norm. In a previous job, I would have a fixed amount taken out of my salary every month, which was ok as I used more childcare.
Some important info from the HMRC:
If you joined your employer’s scheme on or before 5 April 2011 you can get up to £55 each week, or £243 each month free of tax and NICs.
If you joined your employer’s scheme on or after 6 April 2011 you can still get up to £55 each week free of tax and NICs if your employment earnings are not more than the higher rate threshold. If your earnings are more than the higher or additional rate thresholds then the amount you can get free of tax and NICs is reduced.
The limits from April 2013 are:
Basic (20%) taxpayer: £55/week voucher, max annual gain £930.
Higher (40%) taxpayer: £28/week voucher, max annual gain £630.
Top rate (45%) taxpayer: £25/week voucher, max annual gain £590.