What might I need to consider if I am thinking of taking up childcare vouchers being offered by my employer?

Childcare support operating within a salary sacrifice scheme can affect current or future entitlement to a range of benefits. This is because the entitlement to some benefits is based on the amount of National Insurance contributions (NICs) that are paid on an individual's salary, and entitlement to other benefits is based on actual earnings.

Anyone thinking of taking up childcare support offered within a salary sacrifice scheme by their employer should carefully consider what the sacrifice may mean in practical terms.

For example, you should consider: whether accessing childcare vouchers could or will have an effect on your future right to the original (higher) taxable salary; what the effect will be on any pension scheme that is being contributed to by the employer; whether other benefits such as your State Pension or Statutory Maternity and Paternity Pay will be affected.

Accessing childcare vouchers can also affect entitlement to tax credits, so it is important that you consider this before making a decision. There's more information on tax credits on the GOV.UK website, including a 'better off' calculator that factors in the interaction between childcare vouchers and tax credits to help you decide the best option for you.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.

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