All about joining the scheme
1. Can we offer Childcare Vouchers via salary sacrifice or only in addition to existing pay?
It's up to you how you administer your Childcare Voucher scheme. However you manage your scheme, in order to take advantage of the tax and NI exemption you must ensure it complies with the HMRC guidelines.
2. How much can my employees save through Childcare Vouchers?
This depends on several things:
- How much individuals earn
- Whether you offer vouchers on top of normal pay or if employees give up some of their pay
- Other benefits employees receive
3. Could offering Childcare Vouchers affect my employees' entitlement to tax credits?
Yes. Childcare costs that you pay for directly or by vouchers is not included in tax credit calculations. Reducing employees' cash pay may also affect their entitlement.
To calculate how much Childcare Vouchers affect Working Tax Credit and Child Tax Credit entitlements, Edenred customers can use our unique user-friendly online tool, our tax credit Estimator,
For more advice, call our Tax Credits helpline on 0845 300 3900* (Great Britain) or 0845 603 2000* (Northern Ireland).
4. What form of support is not covered by tax and NICs exemptions?
In order to benefit from the tax and NI exemptions you must meet the conditions as outlined by HMRC. If these conditions are not met, or you offer to help your employees pay for their childcare in other ways, for example
- Pay cash to employee in order for them to pay for childcare; or
- Pay the childcare bill; or
- Pay the child's school fees
You will have to apply the appropriate tax and NICs on this support.
5. Are some employees ineligible for the scheme?
Although the childcare voucher scheme (which is operated as a tax and NI efficient benefit) must be generally available to all employees, this does not mean that all employees must participate. For example, employees who cannot participate may be those:
- Without children in qualifying childcare (employees that may choose to use informal care such as a friend or member of the family)
- Not earning sufficient salary to participate
- Who already benefit from working tax credit
- Who choose not to participate
6. Is the £55 a week exemption available to every employee or is it limited to each family?
Every employee who meets the qualifying conditions is entitled to up to £55 a week exemption limit, depending on individual circumstances.
7. What are the differences between electronic and paper vouchers?
Electronic vouchers are credited to an online account which your employees can access to pay their carers via the Internet or telephone. If you opt for electronic vouchers employees will be provided with their own online account via which they can manage their Childcare Voucher funds.
Paper vouchers are posted to your employee's home addresses. Employees simply hand them to their carer as payment.
8. What denominations of paper vouchers can we order?
We recommend that paper Childcare Vouchers are issued as a single voucher for each employee. However, if an employee requires multiple denominations, for example where parents need to pay more than one carer, you may order more than one voucher to accommodate their needs.
9. Do we need to order every month?
You only need to order vouchers for your employees as and when you require them. If they are all paid monthly it is best to place one order per month covering all employees on the scheme.
10. Should we send the Salary Sacrifice Agreements that our employees sign to Edenred?
No, you simply need to file these in your employees' personnel files.
11. How do employees access their (electronic) vouchers?
Employees can access their electronic Childcare Vouchers either on the Internet through their online Childcare Voucher account or via an automated telephone service. Unique login details are sent to each employee in the post when you first include them on an order.
12. What counts as registered or approved childcare?
Registered and approved childcare includes:
- Registered childminders, nurseries and play schemes, including out-of-hours clubs on school premises run by a school or local authority
- Childcare schemes run by school governing bodies (under the extended schools scheme)
- Childcare schemes run by approved providers, for example, an out-of-school hours scheme or a provider approved under a Ministry of Defence accreditation scheme.
- Approved foster carers (the care must be for a child who is not the foster carer's foster child)
In England only:
- Childcare provided in the child's own home by a person* approved to care for your child or children
- Childcare provided in the child's own home by a domiciliary worker or nurse* from a registered agency who cares for the child or children
In Scotland only:
- Childcare provided in the child's own home by (or introduced through) childcare agencies*, including sitter services and nanny agencies, which must be registered.
* Childcare provided in the child's own home will not qualify if the person approved to give that childcare is a relative of the child.
Managing your scheme
13. Can we offer employees refunds for unused vouchers?
Refunds through salary for unused Childcare Vouchers should not be a standard part of the scheme you operate. However, isolated cases may arise where due to extenuating circumstances employees are in possession of vouchers they will not be able to use.
14. What records will I need to keep?
The records you keep should include:
- Evidence the scheme is offered to all staff where appropriate (eg promotional material for your scheme or your staff handbook)
- Details of the childcarer(s) used, including their registration or approval numbers and when their registration or approval expires
- Evidence you have informed participating employees in your childcare voucher schemes that they must inform you of any changes in the registration or approval status of their childcarer
- Records showing the qualifying conditions have been met (you can arrange for a voucher company to keep these records for you but you will be responsible for producing them to HM Revenue and Customs, if required)
If you provide childcare or Childcare Vouchers that meet the qualifying conditions for the exemptions, you will only have to report the benefit for tax or NICs purposes on any excess over the exempt limit.
15. How will we be invoiced?
If you purchase paper Childcare Vouchers, you will be sent a pro forma invoice, by post or email, each time you place an order. A VAT invoice will be sent by post when the vouchers are dispatched.
If you purchase electronic vouchers, a printable invoice is raised online immediately each time you place an order.
16. How do we notify Edenred if our contact details change?
You may inform us of any changes to your contact details by contacting us quoting your account number and detailing the required amendment(s).
17. How do we notify Edenred that an employee has changed their address?
Simply amend their address details on your next order and the details will update automatically.