Childcare voucher scheme
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The Childcare Voucher Scheme was a UK government initiative aimed at helping working parents benefit from tax efficiencies in order to save money on childcare.[1][2] From 4 October 2018, schemes were closed to new members as the system was phased out in favour of the tax-free childcare scheme. The scheme was offered as a salary sacrifice scheme: parents in the scheme could exchange part of their taxable salary, up to a specified limit, for tax- and National Insurance-free childcare vouchers to the same value.
For example, a parent given £55 per week (£243 per month) in childcare vouchers in lieu of the same amount of salary would save up to £933 in tax and NI contributions.
The nature of the scheme allowed many businesses to benefit from running a scheme. Although initially intended to benefit UK working parents, businesses which provided a scheme reduced their employer's National Insurance contributions, not payable on vouchers. Businesses also found other benefits in an increase in staff satisfaction and a reduction in staff turnover, saving indirectly on costs such as employing and training staff.[citation needed]
Eligibility
UK working parents earning under a certain amount are eligible. The scheme is provided on a per-person, not per-child basis, so both parents can claim under the scheme rules. The scheme can be available at the same time as working tax credits, however, this may not always be beneficial. Employees who are currently enrolled and have been since the closure of the scheme are still eligible to utilise the scheme.
Obtaining vouchers
Childcare vouchers are provided by an employer, usually through a childcare voucher scheme provider that an employer chooses.