Everything That A New Parent Needs To Know About Childcare Vouchers

31 07 2013

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Image via Flickr creative commons from familymwr

The birth of your first child brings a whole range of new experiences and challenges. Whilst you’ll need time to share in these experiences with your new baby, there may come a point when you decide it’s time to return to work. This decision could be for a number of reasons, whether you’re in need of a little extra money or you simply love your job and don’t want to lose it. Returning to work however brings yet another challenge, namely, who is going to look after your new-born and how are you going to be able to afford to pay for childcare on top of rent, bills, food and general living expenses? Before you start to panic that you’re going to have to stay at home and look after the baby yourself, while your partner works double the hours to earn enough money to live on, stop. I may have just the solution for you – here is everything that a new parent needs to know about childcare vouchers.

What are childcare vouchers?

If you have never heard of childcare vouchers, it is a scheme set up by the government to help those parents who want to work with the cost of childcare. Some employers may offer you childcare vouchers at the expense of some of your salary. It is not a legal requirement for employers to assist you with childcare costs in return for you coming back to work so it’s worth asking your HR manager whether or not your company uses a scheme such as Co-operative Employee Benefits childcare vouchers.

There is however two other ways in which your employer can help you cover the costs of childcare that do not involve childcare vouchers. If your employer offers you directly contracted childcare or there is an on-site nursery at your place of work then you will not be eligible for childcare vouchers.

How does the scheme work?

If you have children up to 15 years old and require childcare whilst you work, childcare vouchers can save you roughly around £1000 each year. The way it works is by allowing you to pay for the childcare out of your gross salary (that’s before any tax or national insurance is deducted). This ‘salary sacrifice’ means that once you’ve paid for the childcare vouchers, you’re actually better off than if you’d received your usual salary and then spent a portion of it on childcare.

Here is an example:

You sacrifice £1000 of your gross salary which after tax and NI is only worth about £700. You then receive £1000 worth of childcare vouchers, which means that for every £1000 you sacrifice, you actually gain £300 – not bad is it?

Use a savings calculator to work out just how much you could save by using childcare vouchers

Benefits of childcare vouchers

So aside from the assistance with paying for demanding childcare costs, what are the other benefits of using childcare vouchers?

–          Benefits for parents

The childcare voucher scheme allows you to return to work safe in the knowledge that the cost of childcare for your youngster will be met each and every month. There’s no worrying about saving a portion of your incomings to spend on childcare as the cost is sorted before you even receive your net pay (after tax and national insurance). It also saves you some money each month which can add up to a significant saving over a year.

–          Benefits for employers

Your valued members of staff are more likely to return to work after having a baby which means you don’t have to spend time and money on employing someone new and training them each time someone falls pregnant.

–          Benefits for nurseries

Childcare vouchers can be an extra incentive for parents to keep using your services. There are no restrictions as to which provider of childcare vouchers you can accept so you won’t lose out on business either way.

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