Childcare vouchers - Frequently asked questions
- What are childcare vouchers?
- Who can join the scheme?
- What is the basic earnings assessment? When and how is it calculated?
- What happen when my employment earnings change during the year? Will it affect the basic earnings assessment?
- How much money will I save?
- How long do I have to sign up for?
- Is there a minimum and maximum amount of salary I can take as childcare vouchers?
- Can both parents claim if we both work for the University?
- I am a single parent and do not pay all of the childcare costs: can I claim?
- Do the costs have to relate to my own children?
- Can the vouchers be used for more than one child?
- What if I pay a different amount for my childcare each month?
- I only use childcare in the holidays – can I still use the virtualvoucher scheme?
- Can I use any childcare provider?
- What happens if my childcare arrangements change?
- Can I ask to stop receiving childcare vouchers temporarily?
- If I become pregnant could taking vouchers affect my maternity pay?
- Who is responsible for paying the tax and National Insurance of my carer?
- What notice period is required?
- How will my childcarer be paid?
- How long will it take to set up the scheme?
- Where do I send the application form?
What are childcare vouchers?
Childcare vouchers are a type of salary sacrifice scheme whereby an employee formally agrees to a reduction in their salary and instead receives that amount in childcare vouchers. Childcare vouchers are exempt from Class 1 National Insurance Contributions and tax (up to a maximum voucher value of £55 per week/£243 per month).
Who can join the scheme?
You can join the kidsunlimited Childcare Vouchers Scheme if:
- You are the parent or legal guardian of a child under 16 years of age who is in full or part time childcare, or a child of 16 years of age who has a disability.
- Your nursery, playgroup, nanny, childminder or after school club is a registered childcare provider.
- Your earnings after your kidsunlimited childcare vouchers salary sacrifice remain above the national minimum wage.
What is the basic earnings assessment? When and how is it calculated?
The University is required to carry out an assessment of your basic employment income if you join the Scheme on or after 6 April 2011 based on the following information:
- Basic pay as stated in your contract of employment
- Contractual or quaranteed bonuses
- Regional allowances
- Taxable benefits
- Shift allowances
The assessment does not need to include the following:
- Performance related or discretional bonuses
- Overtime payments
- Benefits that are exempt from tax such as pension contributions, employee share scemes and payroll charitable donations
The University does not need to make an assessment for any employees who already participate in the Scheme on or before 5 April 2011.
What happen when my employment earnings change during the year? Will it affect the basic earnings assessment?
The University assess your employment income at the beginning of the tax year or when you first apply to join the Scheme. This will fix what level of exempt income you are entitled to receive for that tax year. If your pay changes during the course of the year this may mean that the amount of exempt income you will be entitled to receive will change from the start of the following tax year when the University carries out another basic earnings assessment. The University will only carry out an earnings assessment once per year.
For example, if you change the number of hours that you work and this would place you in a different tax band for your employment income, the basic earnings assessment carried out at the start of the tax year will remain valid until the next assessment takes place.
How much money will I save?
The money is saved through National Insurance savings since vouchers are free from National Insurance.
Employees who participate in the Scheme on or before 5 April 2011:
In real terms, if you receive £243 per month in vouchers you will save around £75 per month if you are a basic rate taxpayer or £99 per month if you are a higher rate tax payer. See table below for an illustration of what you would save over a year depending on the amount of vouchers taken each month.
Annual savings estimate
Monthly voucher value |
Standard Tax Rate Annual Savings |
Higher Tax Rate Annual Savings |
|---|---|---|
£243 |
£904 |
£1195 |
£200 |
£744 |
£984 |
£150 |
£558 |
£738 |
£100 |
£372 |
£492 |
£50 |
£186 |
£246 |
Employees who join the Scheme on or after 6 April 2011:
In real terms, a basic rate taxpayer can receive up to £243 per month/£55 per week in vouchers and can expect to save up to £933 per year; a higher rate taxpayer can receive up to £124 per month/£28 per week in vouchers and can expect to save up to £623 per year; an additional rate taxpayer can receive up to £97 per month/£22 per week in vouchers and can expect to save up to £606 per year. See table below for an illustration of what you would save over a year depending on the amount of vouchers taken each month.
Annual savings estimate
Monthly voucher value |
Basic Tax Rate Annual Savings |
Higher Tax Rate Annual Savings |
|---|---|---|
£243 |
£933 |
n/a |
£200 |
£768 |
n/a |
£150 |
£576 |
n/a |
£124 |
£476 |
£623 |
£100 |
£384 |
£504 |
£50 |
£192 |
£252 |
How long do I have to sign up for?
You can sign up to the scheme for a fixed period – 3, 6, 9 or 12 pay periods, or on an ongoing basis, depending on the nature of your childcare requirements.
Is there a minimum and a maximum amount of salary I can take as childcare vouchers?
Yes. The maximum amount you can take is £55 per week or £243 per month if you are a base rate taxpayer; £28 per week or £124 per month if you are a higher rate taxpayer; £22 per week or £97 per month if you are an additional rate taxpayer. The minimum amount is £10 per month.
Can both parents claim if we both work for the University?
Yes. You can both claim up to £55 per week (depending what level of exempt income you are entitled to receive for the tax year) as long as the total amount you claim per month does not exceed the monthly cost of childcare.
I am a single parent and do not pay all of the childcare costs: can I claim?
You can claim for any childcare costs that you are responsible for paying up to the maximum amount per week.
Do the costs have to relate to my own children?
You must have legal parental responsibility for the child, which means normally being their legal guardian. You cannot claim for grandchildren, godchildren, nieces, etc. This rule may also affect you if you are a single parent and your children do not live with you.
Can the vouchers be used for more than one child?
Yes. As long as the children are under the age of 16 and their carer accepts payment from kidsunlimited childcare vouchers, but you cannot take more than £55 per week in total if you are a base rate taxpayer; £28 per week if you are a higher rate taxpayer; £22 per week if you are an additional rate taxpayer.
What if I pay a different amount for childcare each month?
If your payments vary from month to month, or are made at a different time to your salary, you can either manage your payments online using kidsunlimited online facility or instruct them by post, email or fax when you need to pay your carer. See the payment options section for more information.
I only use childcare in the holidays – can I still use the virtualvoucher scheme?
Yes – Childcare Vouchers offer the flexibility to pay for your holiday childcare. See the payment options section for more information.
Can I use any childcare provider?
The childcare provider has to be registered with kidsunlimited (The member of kidsunlimited staff will be responsible for ensuring that this arrangement is set up), and they have to be declaring the income they are receiving. This means that the vouchers will not help members of staff who have a ‘cash in hand’ relationship with their childcare provider.
By law nurseries, childminders, out of school clubs and holiday play schemes for the under 8s have to be registered by Ofsted. Once they have had an inspection they will be issued with a certificate and registration number. Nannies need to register through the childcare approval scheme.
Possible carers
- Under 8s
Registered childminders, registered private nurseries and nursery schools, sessional or daycare playgroups, community nurseries, workplace or partnership workplace nurseries, out of school schemes and holiday play schemes, local authority day nurseries, nannies caring for the children of more than two families. - Over 8s
Registered out of school schemes and holiday schemes
What happens if my childcare arrangements change?
If you change your childcarer you should complete the Childcare Vouchers amendment form (PDF, 717KB).
If the childcare fees go up then you need to check whether you could be claiming more vouchers each month (up to the maximum value). If they go down then you need to be sure you are not claiming more than the total cost of childcare in vouchers. Notification by phone must be made to the Childcare Vouchers department of any other changes to the account.
Can I ask to stop receiving childcare vouchers temporarily?
Yes, you can ask to stop receiving childcare vouchers temporarily whilst remaining within the University Scheme – for example, if you only work during school term time and do not need childcare vouchers during school holidays. The University will not treat you as a new joiner when you start to receive childcare vouchers again. Providing the overall period in which you stop receiving childcare support does not exceed a period of twelve months you can remain as an existing member of the University Scheme.
This also applies if you are on maternity leave, long-term sick leave, or wish to take a career break providing the total length of absence does not exceed a period of twelve months.
If I become pregnant could taking vouchers affect my maternity pay?
Any calculations for statutory maternity pay will be based on your reduced salary. If your reduced salary (i.e. your gross salary minus the value of childcare vouchers you take) would work out at less than £130 a week then it is possible that taking childcare vouchers could affect your maternity pay from week 14 to 39 of maternity leave. If this is the case then you are advised to talk to payroll to find out how far in advance of your due date you would need to leave the scheme in order for your SMP to remain unaffected.
Who is responsible for paying the tax and National Insurance of my carer?
If your carer is a self-employed person, a partnership or a limited company, then you are not responsible for paying their tax and National Insurance. If you use Childcare Vouchers to make payments to nannies or childminders who are employed by you, then it is your responsibility to account correctly to the Inland Revenue for PAYE and National Insurance, just as if you paid them in any other way. Childcare Vouchers does not change this. The Childcare Voucher amount should be the amount the carer actually receives. Oxford Brookes University and kidsunlimited do not do this for you and we accept no responsibility if you break the law. The application forms include a clause (an “indemnity”) in which you agree to this. If you are unsure whether you should be deducting tax and NI, you should consult a qualified tax professional.
What notice period is required?
You need to give kidsunlimited at least one month's notice in writing of your intention to leave the scheme.
How will my childcarer be paid?
Through a secure BACS transfer into their bank account.
How long will it take to set up the scheme?
Generally it can be done within a few days. The month the scheme will start will depend on whether the closing date for changes to payroll has been passed for that month.
Where do I send the application form?
Please return the forms directly to kidsunlimited.
Updated June 2011