Childcare Vouchers (Ofsted) – Cut childcare costs by £1,000/year
The Financial Benefits
Many of you may have read about the tax breaks that the Government introduced to assist with “approved” childcare, which includes nannies. If your nanny is registered with OFSTED you may be eligible for childcare vouchers or tax credits
Firstly, for further information on whether you qualify you can visit Tax Credits.
Click here for more information.
If your employer gives you childcare vouchers, the first £55 per week per employee is now exempt from tax and national insurance (and employer’s national insurance) provided registered or approved childcare is used. If both parents receive childcare vouchers they are each entitled to receive £55 per week free of tax and national insurance. Basic (20%) Taxpayer can make a saving of circa £900 per annum.
A childcare voucher scheme can be set up quite easily by your employer but there are various criteria including the scheme being available to all employees. The Human Resources Department should have further details.
If you are a director of your own limited company and would be interested in setting up a childcare voucher scheme, you should consult with your accountant.
To use childcare vouchers. You must:-
- Employ an Ofsted registered nanny
- Be employed
- And your employer must set up/run a childcare voucher scheme.
It is expected that employer-supported childcare vouchers will become an important way for parents to make a substantial saving, as this form of tax relief is available to all parents, regardless of income.
The self-employed are not able to benefit from childcare vouchers at present, but if you are a Director of a company you can, providing you make them available to all your staff as well.
The Childcare vouchers are just a different way of paying your nanny. Her salary will not change when you start using vouchers, nor will the amount of tax and NI you pay on her behalf. However, you will be able to save money on your own tax and NI payments, in some cases as much as £2,000 per family per year if both parents use vouchers.
Childcare vouchers can only be used to pay for childcare.
For more information:
What if the nanny I want is not OFSTED registered?
Nannies who would like to become registered with Ofsted can join the voluntary part of the Ofsted Childcare Register (OCR), however Nannies are not required to be registered on the Ofsted Childcare Register. Registration is entirely voluntary.
- The cost of registration is £105
- DBS check £60 (even if nanny has already had a DBS check done, another one must be carried out (unless the previous check was obtained via Ofsted within the last three years).
- Nanny Insurance (public liability insurance) £70 to £90 Morton Michel
- A valid paediatric first-aid certificate (valid for 3 years) £80 -£120
- Nanny needs to confirm that she has the Common Core skills and knowledge in childcare and is therefore considered suitable to work with children (Level 3 OCN common covre skills )
- In order to continue being registered, a nanny will need to renew their registration annually.
- On successful registration, the nanny is given a unique reference number by Ofsted.
Parents who employ an Ofsted registered nanny can receive some financial contributions towards their childcare costs. There are two types of financial support available: employer-supported childcare vouchers and working tax credits.
If the parent requests that the nanny is Ofsted registered, and especially if it brings a positive financial benefit to the parents, it is increasingly common that the parents pay either partially or in full for Ofsted registration. If the parent does pay for the registration it is considered a benefit in kind and needs to be declared as such.
Who should pay for OFSTED registration?
OFSTED registration is a financial saving to families, therefore to register your nanny to OFSTED, it is typically funded by the employer. Any dedicated nanny should absorb the cost of a first aid certificate and nanny insurance if they do not already hold these.