How does the salary sacrifice scheme save me money?
Every month, you sacrifice a specific amount of your salary and receive that amount in childcare vouchers instead. From 6 April 2006, childcare vouchers (up to £243 per month) are exempt from tax and National Insurance Contributions (NIC), so you will only pay tax and NIC on the reduced level of your salary. This effectively saves money on childcare costs.
For a lower-level taxpayer, this could mean an annual saving of £800 a year on childcare costs. If you pay 40% tax, you could save over £1,000 a year. And each employed parent can claim the exemptions, so a two-parent family could save around £1,900 (lower tax bracket) or £2,300 (higher tax bracket).
To speak to one of our tax experts call 0800 434 6402.
