What would you do with your child care voucher savings?

Child care costs have long been a concern of many parents returning to work. Nursery and childminder fees are usually higher than many people expect, and the cost of having two young children in full-time nursery care, or paying for before and after school care and holiday clubs for older children can be daunting.

To encourage more parents to work, and to relieve the burden of expensive child care, the government has introduced a child care voucher scheme. This scheme allows employees of participating companies to buy child care vouchers with their gross salary, thereby saving on their income tax bill. Both parents can claim the maximum amount allowed, which means that savings can double. Child care vouchers of up to £55 per week or £243.00 per month will give 22% tax payers savings of up to £962 per year and 40% tax payers can save as much as £1195.

To many families, these savings are vital, and can be used to help pay other expenses such as utility bills, rent or food bills. To others, they may represent luxuries such as something for the home, or a better holiday, or just a chance to put some money away for the future.

The fact that the vouchers are exchanged for salary at source may mean that you don't notice the extra money immediately, but with careful financial planning, you will find yourself better off, particularly if you are taking advantage of the vouchers on a monthly basis. If you can see where the savings are being made and you can work out how much you are saving each month, then you can plan what to do with your savings. Overall, it pays to take advantage of the voucher scheme, because no matter what type of child care facilities you use; as long as your provider is registered and accepts the vouchers, you will be saving money on your child care costs.

Date: 08/12/2005