Childcare vouchers have recently been at the centre of a hot debate in parliament, with the government revising their original plans to withdraw tax relief on childcare vouchers.
The U-turn was made after 92,000 people signed a petition on the Downing Street website to save the vouchers, which have become essential for so many families who want to go back to work.
Whilst many people do use this government funded initiative to help with childcare costs, others are either unaware of the scheme of not sure if they're applicable.
So to clear up some of the confusion, here's a brief overview. The childcare voucher scheme allows parents to replace a portion of their earnings with tax-free childcare vouchers. The Daycare Trust's annual Childcare Costs Survey discovered that the yearly cost of childcare exceeds £11,050 in London. This huge costs means many parents simply cannot afford to go back to work.
The scheme enables an employee to take a tax free sacrifice from their wages, which means they gain 22% of their net income due to the tax relief. They also get access to excellent childcare, with just under 7,0000 registered child care providers accepting the vouchers nationally. Employees can claim up to £243 per month, which can mean a working parent can save between £915 to £1195 a year.
The vouchers can be used for the childcare of children up to the age of 15 or 16 for those with disabilities.