Childcare Tax Savings

Did you know that currently, you can save 11% national insurance if part of your salary is paid as child care vouchers? And that both parents can benefit from the saving. There is no limit to how much of your salary is taken as childcare vouchers. Therefore if your childcare cost total £5,200 a year you could save £572. (Subject to salary levels.)

From April 2005 the savings are increased to include tax and national insurance, but only on the first £50 a week of childcare vouchers, the potential saving to a household is £2,132 (Subject to salary levels.) The employer also makes a saving employer's national insurance could be saved at 12.8%. However this saving is tapered by the cost of the voucher scheme they choose to implement and each scheme has a different method of charging.

The vouchers have to be provided for the purpose of paying an approved child carer. The childcare must be registered or approved home-childcare and it must be made available to all employees. If any of the above interests you and you want to find out more please phone Suzanne Connor or Zachary Ramsden at Gilbert Allen & Co on 01732 770100 for our fact sheet on child care. Please specify if you would prefer the employees or employers fact sheet.