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Tax Nuggets - Childcare vouchers for practice staff

Help is available with childcare costs if the practice sets up its own childcare voucher scheme, says Russell Finn.

Childcare vouchers enable practice employees to pay for childcare out of their pre-tax pay, thereby saving money on their income tax and national insurance.

A childcare voucher scheme saves money for the employer as well, as it does not have to pay employer's national insurance or superannuation on the value of the vouchers.

For more information for employers, visit the HMRC website (www.hmrc.gov.uk).

Childcare: voucher scheme can save money for employer and employee (Photograph: Istock)

Only for employees
Sadly, if you are a self-employed locum or GP principal, you will not be able to use the scheme. The only relief you could obtain is if you qualify for child tax credit or the childcare element of the working tax credit.

The value of childcare vouchers that staff can buy is limited to £55 a week for basic rate taxpayers, £28 a week for higher rate taxpayers and £22 per week for super rate taxpayers.

Vouchers do not have to be used just for nursery costs: they will be accepted by any regulated provider, including an after school club, playgroup, nanny, childminder or au pair, until your child is 15 years old.

Possible complications
A word of warning, though, for employees who also qualify for childcare tax credits: vouchers are not classified as paying for childcare, so getting them could limit the amount of tax credit that they can claim.

Also for pregnant staff, vouchers could affect what they can claim by way of statutory maternity pay, because vouchers are not classified as pay. If an employee is in this situation, there is a calculator available on the HMRC website to work out which system works best.

  • Russell Finn is a client principal with specialist medical accountants Ramsay Brown & Partners, www.ramsaybrown.co.uk

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