Employers can offer their staff financial support that is exempt from tax and National Insurance Contributions. The amount currently exempt from these contributions is £55 per week or £243 per month. This support can be provided in three ways:

Childcare vouchers

Vouchers can be used to help pay for your childcare and are one way your employer can help make childcare more affordable for you. The first £55 per week (£243 per month) provided through childcare vouchers is exempt from tax and National Insurance Contributions, so they can help you save money with your childcare fees. You will only pay tax and National Insurance Contributions on the reduced level of your salary. For basic-rate taxpayers, this could mean a saving of up to £904 per year in childcare costs.

Directly-contracted childcare

This is where your employer pays part of your salary, or a contribution in addition to your salary, directly to your childcare provider.

Workplace childcare provision

This is either an addition to your cash salary - sometimes known as ‘salary plus’, or more commonly ‘salary sacrifice’. Salary sacrifice is when your taxable salary is reduced by a specific amount and you receive that amount tax-free in support towards your childcare instead.