Many employers offer their staff support with childcare needs. This support may be offered via direct and / or indirect schemes, all of which are aimed at helping with staff retention, motivation, and reducing absenteeism. In addition, both employers and working parents can benefit from important tax savings that apply to various forms of childcare.
General guidance on employer-sponsored childcare
Tax credits and childcare (information for working parents)
Guide to childcare costs and help available
Salary Sacrifice Childcare Schemes
Some employers may provide childcare support by implementing salary sacrifice schemes, which allow parents to forfeit part of their salary and use it towards the cost of childcare arrangements. From a tax point of view, these schemes can be beneficial to both the company and the employee, as the amount allocated to childcare is usually tax exempt. Offering childcare vouchers are another form of implementing a salary sacrifice scheme.
Salary sacrifice schemes & tax
Guide to salary sacrifice schemes & childcare vouchers
The provision of employer-sponsored childcare is usually subject to certain tax guidelines. Please see the links below for detailed guidance and information on tax and National Insurance Contributions related to childcare.
Childcare tax credits
Childcare tax and reporting rules for employers
Childcare & tax implications for employees
As part of the UK government’s Tax-Free Childcare scheme it is possible to get up to £500 every 3 months for childcare per child. This figure increases to £1,000 every 3 months if a child has a disability. You can find out more about Tax-Free childcare, included what the funds can be used for and eligibility requirements, here.
On-Site and Employer Sponsored Childcare
Workplace childcare is considered an employee benefit, although its adoption by employers is not yet widespread. Companies who are interested in offering on-site childcare to their employees can use the services of specialist providers of on-site corporate childcare. Many of these companies can also provide emergency corporate or back up childcare at short notice.
Some established providers of on-site corporate childcare include
My Family Care
On-site childcare arrangements may be attractive to some employers, as tax exemptions apply in certain cases.
As an alternative to on-site childcare, some employers may prefer to offer childcare vouchers. These may or may not be tax exempt (NIC and Income Tax). For more details please refer to the relevant link below.
Workplace Childcare Expenses & Tax Implications
Childcare vouchers & Tax liabilities
Childcare vouchers HMRC Calculator
Childcare Guide for Working Parents
Choosing a childcare provider is a personal decision that must be taken after evaluating the family's needs and financial situation. Some councils offer childcare to working parents free of charge.
Guide to childcare support
Childcare & Working parents
Find free childcare by postcode
Types of Childcare
Generally speaking, childcare options can be classified into those provided by individuals and those offered at dedicated facilities. The most common types of childcare available to UK parents include:
- Nannies and home-based carers: this option can be part of a live-in arrangement or can be provided on a more flexible basis (as and when required). If a nanny / home-based carer is paid above £156/week, the employer must deduct National Insurance Contributions from their payslip.
- Childminders deliver childcare in residential premises and usually look after children aged 5-8. Depending on the children's age, childminders must sign up to the Early Years / Childcare Register.
- Day nurseries, preschools and playgroups, and nursery schools provide childcare in approved facilities to children of different age groups (0-5 for nurseries, 3-5 for preschools and nursery schools). These are regularly inspected by Ofsted, although some exceptions apply.
Nannies and payroll
Information on Registered Childminders
Choosing a day nursery
In order to find a suitable childcare provider, it is recommended to visit their facilities in person in addition to reading the latest Ofsted inspection report (see section below for more details). Childminders and other independent childcare providers or self-employed professionals are required to have a valid DBS check and should also have a thorough understanding of health and safety and inclusive standards. Nannies are not required to be registered with Ofsted, but they can do so voluntarily.
Finding a registered childminder
Finding other childcare providers
Legal requirements for childminders
Ofsted registration for nannies
Ofsted Inspection Reports
The Office for Standards in Education, Children's Services and Skills (Ofsted) is the regulatory body responsible for setting and enforcing standards of care in nurseries, schools, and childcare facilities. This organisation has made available reports with its inspection findings, which parents can use to help them choose a childcare provider.
Finding an Ofsted Inspection Report
Childcare Benefits and Tax
Some benefits are available to some parents who are employed and require paid childcare. To be eligible, childcare arrangements must be approved by Ofsted, the Scottish Care Inspectorate, the Care and Social Services Inspectorate Wales, or local early years team register, depending of the family's location. Tax credits and childcare vouchers are also available to eligible parents.
Childcare and Tax Credits
Childcare calculator tool (find what help you may be entitled to)
Guide to choosing and paying for childcare