Most Nanny Employers will not benefit from the working tax credit as only households with a combined family income of less than £59,000 will qualify.
Employer-supported childcare vouchers are available to all parents, regardless of income.
The vouchers are another way of paying your nanny and will not affect their salary or the amount of tax or NI you pay on her behalf. The employer will be able to save money on their own tax and NI payments of up to £1,196 per annum and if both parents join the childcare voucher scheme, up to £2,392 per annum.
Any organisation, large or small, private or public, can operate a Childcare Voucher Scheme. Self employed persons are not able to benefit from childcare vouchers. You simply exchange a part of your salary for the same amount of Childcare Vouchers, which are tax free and national insurance contribution exempt. The vouchers are issued directly to you from your employer and when you receive them you simply pay the person who looks after your child with the childcare voucher instead of cash or cheque. There is now an electronic version which gives you the option to pay your nanny electronically, similar to online banking.
Your Nanny will need to register with a Childcare Voucher Company and provide the Voucher Company with a copy of her OFSTED registration. Once the Voucher Company has received the registration from the Nanny she will be issued with a service provider number. If electronic vouchers are used, then the money will be transferred automatically into the Nanny’s account. If a paper version is used, then the nanny needs to call or email the Childcare Voucher Company for redemption and they will receive the money shortly afterwards. A Nanny has the option of being paid by BACS or cheque and it takes approximately 3 days for it to clear into the Nanny’s account. If the paper version is used, an Employer may need to slightly adjust a Nanny’s pay day, so that there is no delay in her obtaining her salary.
Childcare vouchers can be redeemed on registered childcare for children up to the age of 16 years old.