Supportive bosses are able to offer working parents a tax-free bonus as of, 5 April, in the form of childcare vouchers.

Eligible parents can now join a salary sacrifice scheme where they may choose to receive up to £50 a week of their salary in childcare support, meaning they no longer pay tax or national insurance on that part of their pay packet.

But warns the Trades Union Congress (TUC) parents must weigh up whether sacrificing an element of their National Insurance and tax to pay for childcare will impact on their current entitlement to tax credits.

Parents also need to consider that they may be jeopardising any future entitlement to such work-related benefits as maternity pay, sick pay and occupational pensions, and to state benefits such as the state second pension, Incapacity Benefit and Job Seekers’ Allowance.

TUC General Secretary Brendan Barber said: “The Government should rightly be proud of its record on investment and support for childcare. Today’s changes are another good example of their commitment to help working parents. Many people, especially higher earners will be quids in as a result of these tax and National Insurance changes, but parents should do the sums first as not everyone will be better off. Parents on low pay may find that by signing up they will be short-changing themselves further down the line.

“Understanding what joining the new system of childcare support could mean for an indvidual’s current and future bank balances can be a complex exercise, but our online advice could help parents see more clearly whether or not this is for them.”

For further help see the TUC’s online advice at www.workSMART.org.uk

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