With only a few more days left before the start of the school term, many of us will feel a sense of relief that the additional stress of summer child care costs is now almost behind us. If you pay for child care for your children, there is a way to claim free child care vouchers.
Free child care vouchers could enable you to save around £1,000 year. CashLady takes a closer look at these vouchers and investigates how you could get them.
What are free child care vouchers?
Free child care vouchers are part of a Government scheme.
Child care vouchers are provided through some employers. Usually, this is done through what is known as a ‘salary sacrifice scheme’.
This means that you sacrifice some of your wages in return for the child care vouchers.
The reason you may choose to do this is that you would pay no tax or national insurance on these vouchers.
Essentially, this enables you to pay for your child care out of your pre-tax salary.
For example, say that you were able to sacrifice £500 of your salary in return for child care vouchers.
Normally, when tax and national insurance is taken off the £500, you may only be left with around £350 of ‘take-home’ pay. However, by sacrificing the £500, you could get £500 worth of child care vouchers, which would leave you £150 better off.
This is only a working example to illustrate how salary sacrifice works. How much you could sacrifice from your salary and receive in child care vouchers will vary. If you want to get a more accurate picture of your circumstances, take a look at this calculator.
How much can I get from child care vouchers?
The government says that you could get up to £55 per week from child care vouchers. The amount you could be eligible for depends on when you joined the scheme and how much you earn.
This maximum amount is per parent. Each working parent may be eligible for child care vouchers. This could mean that two working parents could get up to £110 per week of child care vouchers.
It is important to note that choosing to receive child care vouchers could impact on a number of tax credits you get.
The government has a calculator on its website to enable you to work out if you would be better off (or not) by opting to take child care vouchers.
How old do my children need to be to receive free child care vouchers?
In order to get free child care vouchers, your child must be under 15 years old. The child care vouchers can be used for child care up to 1st September after your youngest child’s 15th birthday.
For disabled children, this requirement changes to under 16 years old.
It is worth noting that the maximum amount that you can receive is the same no matter how many children you have.
Can I use my vouchers for any child care provider?
You will need to ensure that whoever is looking after your child/children is Ofsted registered, in order to be able to pay with the child care vouchers.
Can I save up my vouchers for the school holidays?
Most vouchers do last for quite a while before they run out, so you could opt to store them for when you need them most.
However, it is worth noting that child care vouchers are not usually refundable, so you may not want to collect too many.
How do I get child care vouchers?
You will need to speak to your employer about getting child care vouchers.
Do all employers offer child care vouchers?
Not all employers take part.
Speak to your employer directly to find if they offer free child care vouchers.
Is there a deadline to apply?
If you decide to apply for child care vouchers, you will have to do so before April 2018. This is because the government is bringing in a new scheme, known as tax-free child care.
If you are eligible, this scheme could enable you to get as much as £2,000 a year, per child, to help with child care costs.
There is more information on tax-free child care on the government website.
Child care vouchers can help you to save money by paying for your child care out of your pre-tax salary.
However, this scheme is not for everyone as it could have an impact on a number of tax credits you get.
The child care vouchers scheme is going to be replaced with the new tax-free childcare scheme. This new scheme is open for applications now. One of the benefits of the tax-free child care scheme is that self-employed people can apply.
To find out which scheme you could be better off with, take a look at the Government’s childcare calculator.