Employer Supported Childcare
Some employers offer Employer Supported Childcare (ESC) to help towards the costs of qualifying childcare. It is up to your employer whether they decide to offer ESC or not. There are three types of ESC:
- Workplace nurseries – This is where your employer has a nursery or crèche at your place of work. If certain conditions are met, this is a tax and National Insurance (NIC) free benefit.
- Directly-contracted childcare – This is where your employer arranges with a commercial childcare provider to provide childcare for you (again, a tax and NIC free benefit, up to certain limits).
- Childcare vouchers – This is the most common type of ESC. Your employer may give you vouchers that you can use to pay for childcare. Your employer may give you these in addition to your salary or you can choose to give up some of your salary to buy childcare vouchers (called salary sacrifice). You save tax and NIC on the value of the vouchers (up to certain limits).
You can find out more about these types of employer supported childcare on GOV.UK. (Even though this information is aimed at employers it will be useful for employees too.)
The tax and NIC relief associated with childcare vouchers and directly-contracted childcare was withdrawn from 4 October 2018 due to the introduction of tax-free childcare. (Workplace nurseries won’t be affected by the introduction of tax-free childcare.)
Certain people who signed up before that date are eligible to continue receiving the relief. We explain more about who can continue to benefit from the tax and NIC relief in the Who can claim vouchers? section.
In this section we explain more about childcare vouchers, the most common type of ESC.