Employee
Childcare vouchers through a salary sacrifice scheme
Childcare vouchers can only help with your tax and NIC exemptions when they are given instead of your cash salary. Therefore, you must agree to a reduction in salary (known as a salary sacrifice) in exchange for some other form of remuneration (i.e. the childcare vouchers).
You will be required to sign a salary sacrifice agreement with your employer which is a variation to your terms and conditions of employment relating to pay.
Childcare vouchers and tax credits
Taking childcare vouchers through a salary sacrifice scheme could affect the amount of other benefits that you are entitled to such as Statutory Sick Pay, Statutory Maternity Pay and Working Tax Credits. It is the employee’s responsibility to determine and understand the effect on their benefits that entry into a childcare voucher scheme will have.
The HMRC website provides detailed information. www.hmrc.gov.uk/childcare/index.htm