Employer-supported Childcare Vouchers

Employer-supported childcare vouchers operate as a salary-sacrifice arrangement whereby there is an agreement for an employee to take less salary (up to £55 per week) in exchange for employer childcare vouchers (or directly-contracted childcare). As a consequence of this, employees benefit from a reduction in tax and national insurance contributions on the value of their employer-supported childcare vouchers.

It is not possible to get a refund on any excess childcare vouchers unless the employer allows it. Any adjustment would also need to consider the tax and NI savings that have been given.

Employees can temporarily stop their salary sacrifice arrangement and therefore stop receiving childcare vouchers (or directly-contracted childcare through their employer scheme), without having to leave the scheme entirely. In these circumstances, employees must start taking their vouchers again (or workplace nursery option) within 52 weeks. This may be an option for employees in the current situation who may be working from home or have been furloughed, for example, and therefore don’t need childcare vouchers for the time being.

The important thing for employees to remember is that the temporary break from the employer’s scheme must not last more than 52 weeks, otherwise they won’t be able to re-join and would need to secure other types of support towards childcare costs.

For more assistance on employer-supported childcare vouchers, please contact Warren Moores, Associate, on 0161 475 1225 or email [email protected].