Childcare vouchers are a means of paying for childcare – they are one of the ways in which employers can assist employees with childcare costs. Childcare vouchers are a government initiative to help working parents pay for childcare such as nurseries and play schemes. Parents and their employers will benefit from running a childcare voucher scheme. Parents save money because childcare vouchers are exempt from Tax and National Insurance. Employers will pay a lower amount of Employer National Insurance. Childcare vouchers are exempt from National Insurance and Tax up to the value of £55 per week.

Childcare vouchers can be offered to you in addition to your cash salary but are more usually offered as a “Salary Sacrifice”. This means that you sacrifice an amount of your salary and instead receive that amount in childcare vouchers. Salary sacrifice means that an employee agrees to a reduction and instead receives that amount in childcare vouchers. The contract between employer and employee will need to be a signed agreement which reflects the salary sacrifice agreement. This should make the decrease in salary the employee had agreed to, the time length of the agreement and the amount they will receive in vouchers.