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Top tips on saving money for working parents

25 February 2011 No Comment

The New Year is here: time for us to start thinking about getting the kids to bed earlier, eating more healthily, spending more time relaxing, and no doubt spending less money after the indulgence of Christmas!

I find it tough resisting the urge to meet the many demands of my children at Christmas – something I’m sure most parents can relate to. So, the inevitable budgeting and saving drive begins in the New Year and as we are in the midst of what many call ‘an age of austerity’, it may be that you’re looking for long-term ways to save a few pennies; in anticipation of next Christmas perhaps!

In the same way that you review your utility providers, shop around for cheaper insurance or open a new savings account, you should make sure you maximise your potential savings on childcare.

One of our recent surveys showed that more than one in three (36%) parents has considered giving up work because they feel unable to cope with childcare costs. It’s not wholly surprising they feel this way. The Daycare Trust recently announced that the cost of a nursery place is rising at twice the rate of inflation. Added to that, the government will remove child benefit for higher and additional rate tax payers from 2013, money which many parents rely on to help pay for their childcare needs.

However, when every penny counts, it’s worrying that many parents believe it’s more cost effective to stay at home, especially when the Government are actively encouraging people to return to work and there are viable ways to save on childcare. I see it as part of our job to make sure parents are aware of what those options are.

Childcare Vouchers are one of the most crucial money-saving options offered by many employers. As a salary sacrifice scheme, they benefit both employers and employees, as neither pays National Insurance on salary exchanged for the vouchers.

It’s such an easy way to save too; all working parents have to do is request Childcare Vouchers from their employer to pay for registered childcare*. A proportion of their gross salary will be exchanged for the Vouchers, which can provide parents with the equivalent of 31 per cent** saving on the first £243 that they spend on registered childcare costs per month. Therefore, during the course of a year, childcare vouchers could provide a saving of up to £904** for a basic rate tax-payer.

Surprisingly, many parents do not realise the extent of the flexibility of the Childcare Vouchers. They can be used for childcare right up until your children turn 16; not just for nursery or childminders but for pre-school care and various out-of-school or holiday clubs as well. If your 7 year old starts pleading for violin lessons at school like my youngest daughter did, then why not look at using vouchers?

I’ve found that parents are often surprised but relieved that vouchers can help them look after their older children too, for a variety of different activities.

In fact I was talking to a friend of mine over Christmas who was worried about how to provide ballet and music lessons for her children when money is tight – she hadn’t even heard of childcare vouchers but went straight home to talk to her employer and sign up online!

One very important thing parents thinking about Childcare Vouchers should know is that the tax rules within the scheme will change for new applicants in 2011. From 6 April all new users of Childcare Vouchers on higher and additional tax rates will see a reduction in their annual savings. You can read more about these changes on our dedicated website www.computersharevoucherservices.com/actnow. However, to reassure any existing users who are reading this blog, these alterations will not affect people already receiving vouchers.

If you’re looking to join a Childcare Voucher scheme and would like some more information, we have everything you’ll need on our website www.computersharevoucherservices.com. Alternatively why not give our team a call on 0845 002 1111

* Childcare provider must be registered with an official body, like Ofsted

** Subject to individual circumstances. Higher or additional rate tax-payers may save more.

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