Childcare vouchers

Children in playgroup

30 / 7 / 2009

Childcare vouchers can be offered in addition to salary but are more commonly offered as a ‘salary sacrifice’. This means that a specific amount of salary is replaced by childcare vouchers.  

From April 2006, childcare vouchers became tax and National Insurance exempt for up to £55 per week (£243 per month). Tax and NI contributions are only paid on the reduced level of salary received.

This can save employees between £916 and £962, a higher-rate tax payer could save up to £1,195 per year, while the employer could save around £370 per year for each employee choosing childcare vouchers. Each employed parent can claim the exemptions, and a two-parent family could potentially save up to £2,392 per annum depending on individual circumstances.  

Changes to the Sex Discrimination Act and Parental Leave Regulations in 2008 have increased the length of time employers must provide childcare vouchers to employees on maternity leave.  If you receive childcare vouchers through your employer, you are entitled to continue receiving them during your maternity leave. This is true even if you are in a salary sacrifice scheme  but have no salary to sacrifice (i.e. you only receive Statutory Maternity Pay).

This has been the case during Ordinary Maternity Leave (OML) and is now the case during Additional Maternity Leave (AML).

Find out more about these changes from the Government's Equalities Unit or the Daycare Trust.

For babies born on or after 5th October 2008 employees are entitled to continue receiving childcare vouchers for weeks 1 to 26 (Ordinary Maternity Leave or OML) and then for weeks 27 to 52 (Additional Maternity Leave or AML).

Failure by employers to comply with the new legislation will leave them open to a claim of sex discrimination under the Equal Pay Act or the Maternity and Parental Leave Regulations. 

A full copy of the recent legislative changes can be found here.

Further information and advice for NHS Trusts

NHS Employers and their legal advisors have prepared a factsheet for NHS trusts covering the most frequently asked questions about the changes to the Sex Discrimination Act and Parental Leave Regulations. 

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