Benefits The benefits of childcare vouchers for parents

Participating in the Childcare Account scheme offers great savings.

Based on the following assumptions

  • Annual childcare costs 4500 per year (375 per month)
  • Not contracted out of state second pension scheme
  • Tax and NI savings on 55 week (243 per month)

Basic Rate Tax Payer (Annual Earnings 20,000)

Higher Rate Tax Payer (Annual Earnings 40,000)

Tax Saving (243 x 22%) = 53.46 month

Tax Saving (243 x 40%) = 97.20 month

NI Saving (243 x 11%) = 26.73 month

NI Saving (243 x 1%) = 2.43 month

Total Saving 80.19 month

Total Saving 99.63 month

Worth nearly 11 weeks free childcare per year

Worth nearly 14 weeks free childcare per year

  • Both parents are eligible to join a childcare voucher scheme so you could double your savings.
  • Child tax credits and child benefits can also potentially be paid in to your Childcare Account to go towards the cost of your childcare.
  • As a parent you can salary sacrifice the whole amount of your childcare costs but only the first 55 per week (243 per month) is tax and NI exempt (and your final salary must not put you below the National Minimum Wage).