Walsall FIS offers up-to-date information,
advice and help on services for families in Walsall.

Tax Free Childcare

If you are working and used registered childcare then you may be able to get help towards these costs. For some parents and carers this can be via the Childcare Element of Working Tax Credit. Others opt to use childcare vouchers or a salary sacrifice scheme.


Childcare vouchers

If you use childcare vouchers, you do not pay Tax or National Insurance Contributions (NIC) on part of your earnings. This saves you money. The amount you save overall is based on your circumstances, but the amount of earnings that you do not pay Tax or NIC are shown below:

Tax Rate          Amount of wage exempt (per week)
Basic £55.00
Higher £28.00
Additional £22.00

As a guide, if you are a lone parent on the basic tax rate, you could save £900.00 per year.

To be able to use vouchers both your employer and childcare provider need to be signed up to a voucher scheme.


Salary sacrifice

A salary sacrifice scheme is similar to childcare vouchers, whereby you do not pay Tax or NIC on part of your wages saving you money. The amount you save is based on your wages and personal circumstances, but if you are a basic rate tax payer, you could save (approx) £900.00 per year.

However unlike childcare vouchers, if you use a salary sacrifice scheme, your employer has to change your contract to reflect the amount the your salary is reduced. This change can then affect any contribution based benefits such as Retirement Pension or Statutory Sickness or Maternity Pay.

You can find out more about these options by downloading the HMRC Getting help from your employer guide (PDF 153KB) or by visiting the Her Majesty's Revenues and Customs website.