Does my employer have to offer a childcare benefit to me?
No. It is voluntary for employers to offer these benefits. But it is a qualifying condition of the exemption that if the employer offers tax and NICs-free childcare benefits, the scheme should be offered to all the employer's staff where the scheme operates.
Can small employers provide childcare benefits?
Yes. Any size employer can help their employees with childcare.
Can I benefit from the tax and NICs savings if I am self-employed?
No. The exemption applies to employer-provided childcare benefits only.
Help with childcare costs for self-employed parents in low-to-middle-income families is available through tax credits.
How much money could I save from taking 50 a week in childcare vouchers instead of cash pay?
You would pay tax and NICs on your lower salary - this would save you around 16 a week if your highest rate of tax is the basic rate of 22 per cent, and around 20 a week if you pay tax on some of your earnings at 40 per cent. You would pay no tax or NICs on the childcare vouchers if the qualifying conditions were met. Your employer would save NICs too (around 6 a week per employee before taking account of any extra administration costs).
Can a salary sacrifice affect other pay-related payments or benefits?
Yes. A salary sacrifice is a reduction in your entitlement to cash pay and it is important that you understand what the effects of entering such an agreement might be.
It is important that you understand how your employer will calculate your future pay rises, overtime rates, sick or maternity pay and company pension contributions after your cash pay reduces. You should also be clear about how long the agreement lasts and that the childcare or childcare vouchers will be needed for the duration of the agreement.
If you are eligible for tax credits you will need to re-calculate your tax credit entitlement.
Employer-provided childcare and childcare vouchers do not count as income for tax credit purposes but, equally, childcare costs met by employers or with childcare vouchers are not counted as eligible childcare for tax credit purposes because the costs have not been met directly by the family.
This does mean that families who are eligible for tax credit help above the basic family element of Child Tax Credit (545 per year) could, depending on the level of family income, find that the tax and NICs savings they would make if they took childcare benefits instead of cash pay, may be cancelled out by reduced tax credit entitlement.
Is the 50-a-week exemption applied to each parent or each child?
The exemption applies on a one-per-employee basis. This means that, if two parents are employed, each could benefit if their employer offers qualifying childcare support. Absent parents can also get the benefit of the exemption if they contribute to childcare costs through employer schemes.
What sort of childcare is registered or approved?
Registered childcare can include nurseries, creches, childminders and after school clubs. Registration is normally a legal requirement for these.
Approved childcare (in England only) since 6 April includes home childcarers (nannies) and childminders looking after older children.
Approval is voluntary.
Childcare (for children up to seven) is registered in England by Ofsted, in Scotland (for children up to 16) by the Care Commission, in Wales (for children up to seven) by the Care Standards Inspectorate for Wales and in Northern Ireland (for children up to 12) by local health and social services trusts.
How can my childcarer apply for approval?
Nestor Primecare Services runs the new approval scheme in England.
Call them on 0845 7678 111 (calls charged at local rates) or visit www.
surestart.gov.uk/childcareapproval.
Can I benefit if a relative looks after my child?
You can benefit if your relative is a registered childminder and the care is not being provided at the child's home. You can also benefit if your relative is approved under the new scheme, as long as the care is not being provided at the child's home and your relative cares for other children as well as yours.
