How can I pay my nanny using Childcare Vouchers?

The rules for paying a nanny using Childcare Vouchers varies depending on which country you are in... alas it isn't the same throughout the UK. As I nanny in England, I will explain how the Chidcare Voucher system works for parents who employ a nanny in England.

In England, nanny employers who want to pay their nanny using Childcare Vouchers need to get their nanny to register with Ofsted on the Voluntary Part of the Ofsted Childcare Register. You should ask your nanny to read the Guide to Registration on the Ofsted Childcare Register. You nanny will need to meet the minimum requirements for registration, which includes: First Aid Training, Childcare Training, Nanny Insurance plus various other things... see the Guide for details.

The registration process can take several months. Once registered, your nanny will be sent a Registration Certificate which will include a unique identifier.

Your nanny then needs to contact the Childcare Voucher company. Who that is will vary as your employer will have selected a company to administer the scheme for them, or they may even administer the scheme in-house. If both parents are able to use Childcare Vouchers it is quite possible that their employers use different voucher companies, so your nanny will need to register with both voucher companies. Many voucher companies have a form which the nanny completes. That form together with a copy of the Ofsted Registration Certificate are sent to the voucher company, who then issue the nanny with a carer identifier.

Once your nanny has a carer identifier, you can then ask your payroll department to pay part of your salary via childcare vouchers - this is a deduction from salary scheme so can effect pension rights... so do check that the scheme is suitable for you - your HR department / payroll department will have some info available.

Childcare Vouchers can come in a variety of formats... some are physical paper vouchers while others are fully electronic. Some voucher companies require that you Authorise each voucher, others do not.

With paper vouchers, you get given the voucher as part of your pay and give the voucher to your nanny. Your nanny then contacts the voucher company to redeem the voucher - often by phone or via the internet. Then the voucher company processes payment and within a week the payment is in your nannies bank account.

What issues are there with Childcare Vouchers?

The major issue currently with Childcare Vouchers is the time it takes for the voucher companies to redeem the voucher. Therefore you allow ample time (I would suggest 2 weeks) for your nanny to be paid by the voucher company.

Your contract with your nanny will be to pay them on a specific date, typically at the end of the month. You will be in breach of your contract if you do not pay on time. Do not rely on the voucher company to pay on time. Instead the first month you get a childcare voucher, keep it. That month you pay your nanny as usual.

The following month, you can then use that voucher you have, to part-pay your nanny. Payslip wise this is a deduction from the NET Pay figure.
For example, if the NET Pay due figure is £780 and the voucher amount is £243 (this is the typical voucher amount), then you give your nanny the voucher plus £537 - these days you would pay your nanny via BACS directly into their bank account. Many parents use the Internet Banking facility provided by their bank.