Childcare Vouchers / Ofsted Registration

Childcare vouchers allow you to pay for childcare from your PRE-TAX salary – but act FAST if you want them. While voucher schemes are available to new entrants until 4 October 2018, many will need to apply now!

It may not seem a huge amount, but the impact can be huge. If you’re not taking advantage, check to see if it’s worth signing up – the Government scheme was meant to close to new applicants in April but was extended for six months, so there are still a few weeks left…

Childcare Voucher change to Tax Free Childcare – What you need to know:

  • 30 Free Hours of Childcare – This cannot be used for Nannies

Until October 2018:

  • Dependent upon the best scheme that works for family needs – you will be able to apply for either Tax-Free Childcare or Childcare Vouchers.

After October 2018:

  • To all new Applicants (if eligible*) Childcare vouchers will not be available. Eligible applicants will need to apply for Tax-Free Childcare

 

Childcare Vouchers Tax Free Childcare 
  • Will remain open to new applicants until October 2018
  • Will replace Childcare Vouchers after October 2018 (for eligible) New Applicants
  • Families can continue using Childcare Vouchers if they are already using. This is providing Employers use a scheme and for as long as the employer continues to offer the scheme.
  • A Tax-Free Childcare account will need to be set up and Parents/Carers will pay from their net salary into the account.
  • Untaxed money from Parent/Carer’s salary is taken by the employer and paid to a Childcare Voucher Provider
  • The Government will top up by 20%
  • The Nanny will be paid by the Childcare Voucher Provider
  • Employer of the Parent/Carer is not involved
  • After October Tax Free Childcare will replace Childcare Vouchers
  • The nanny will be paid via Tax-Free Childcare.
  • A way to save money on childcare costs, offered by the employer and as a salary sacrifice.
  • Salary earnt by each parent/carer must be under £100,000.
  • For Ofsted Registered Nannies only.
  • Open to families with children under 12 years old and children with disabilities under 17 years old.
  • You’re unable to use Childcare Vouchers and Tax-Free Childcare at the same time.

Childcare Vouchers – What do you get?

  • Each Parent/Carer can claim up to £243 in Childcare Vouchers.
  • If Employers of both Parents/Carers offer a scheme, then up to the same amount can be claimed by both.
  • Amounts that can be claimed will differ with earnings.
Up to £41,865 Up to £243 per month
£41,865 – £150,000 Up to £124 per month
Over £150,000 Up to £97 per month

Childcare Vouchers – how do they work?

  • Are only available to Parents/Carers if their current employer offers a scheme.
  • Prior to the usual Tax and NI deductions made to the parent/carers salary – a portion of the salary is deducted and paid to the scheme.
  • A tax saving is made – as there is no tax paid on the voucher and less of the salary is taxed.
  • The Childcare Voucher provider will release the portion of the salary paid into the scheme to the Nanny, upon instruction.
  • A portion of the Nanny’s salary is paid via the Childcare Voucher Provider.
  • Nanny’s Net Pay – the total value of the vouchers is deducted, and the rest will be paid as normal to the Nanny.

Tax-Free Childcare – What do you get?

  • Up to £2,000 per child, per year can be saved.
  • For each child an online childcare account can be opened.
  • The Government will pay an extra £2 automatically for every £8 paid in.
  • Every three months the Government can pay up to £500 per child (£2000) towards childcare.
  • Can be used to pay the Nanny.

Tax-Free Childcare – how is it managed?

  • Via an online Childcare account.
  • Register to open an account and search and select your childcare provider to receive payments.
  • To Register: www.gov.uk/help-with-childcare-costs

What does this mean for Nannies?

  • Nannies will need Ofsted Registration for you to use Tax-Free Childcare.
  • Nannies are Childcare Providers so will need to register as a provider with the scheme.
  • You will be able to send payments directly from your Tax-Free Childcare account to the Nanny’s Account.

So, how do you pay Tax and National Insurance via the Online Account?
Step 1: Log into your Tax-Free Childcare Account
Step 2: Add another Childcare Provider
Step 3: Add HMRC as Childcare Provider and the amount you want to pay.
Step 4: Enter a 17 Digit Reference Code (will change with each payment)

  • You can view and print previous payments.

*Eligibility (Tax-Free Childcare)

  • The Parent/Carer must have a child living with them.
  • Parent Carer must have a child under 12/under 17 if disabled.
  • Both Parents/Carers or single Parent must be in paid work (Employed or Self Employed) and with average expected income of at least £115 a week.
  • Each Parent/Carer – Earn less than £100,000.
  • Parents/Carers must not be receiving other Government Support – i.e – Tax Credits, Childcare Vouchers etc.

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