HMRC Approval for your Childcare Voucher Scheme
KiddiVouchers schemes have been carefully designed to operate in accordance with HMRC guidelines. Although there is no legal requirement for you to advise HMRC about your KiddiVouchers scheme, we strongly recommend that you seek their approval.
Gaining approval for a KiddiVouchers scheme is normally a formality. Simply edit the following letter, print it on your headed paper and send it to the HMRC Clearances Team, at the address shown on the letter, as soon as the first employee joins your scheme. If you are a public sector body, please overwrite the address shown with the address of your own tax office.
In order for the HMRC Clearances Team to be able to assess your scheme thoroughly, is it essential that you enclose the following documents with your letter:
1. A copy of one of your employees’ payslips, before and after the salary sacrifice.
2. A copy of one of your employee’s salary sacrifice agreements, which you can download from your online KiddiVouchers account.
3. A copy of the scheme rules, which you can download from your online account.
4. A copy of your contract with KiddiVouchers. Unless you have entered into a separate contract with us, please use the standard terms and conditions which are available in your online account.
If you reference the documents with numbers 1 to 4, you are less likely to receive any queries from HMRC.
When you receive approval from HMRC, please post a copy of the approval letter to KiddiVouchers, 11-16 Chestnut Court, Jill Lane, Sambourne, B96 6EW so that we can add it to your scheme records.
If you have any queries, please contact us on 0800 612 4395 and we’ll be happy to help.
Your letterhead here
Contact Tel:
Contact email:
HMRC
Clearances Team
5th Floor Alexander House
21 Victoria Avenue
Southend on Sea
Essex
SS99 1BD
<Date>
PAYE Ref:
Dear Sir
Approval of a Salary Sacrifice Scheme for Childcare Vouchers
I am writing to inform you that <Company name> has introduced a salary sacrifice scheme in order to provide childcare vouchers to staff. I understand that HMRC can comment on the effectiveness of salary sacrifice for tax and national insurance purposes and I would therefore be grateful if you could confirm that the scheme meets your requirements.
The childcare voucher scheme is provided by KiddiVouchers, an independent company specialising in childcare voucher administration. Under the terms of their appointment, KiddiVouchers is responsible for ensuring that the childcare vouchers are used only for eligible childcare and for keeping appropriate evidence of this.
All our contractual employees are entitled to join the scheme and are invited to do so at least once a year. Employees may choose how much of their salary they wish to sacrifice in exchange for childcare vouchers, up to a maximum of £55 per week or £243 per month.
When employees choose how much of their salary to exchange for childcare vouchers, they are asked to accept a salary sacrifice agreement which acts as a variation to their employment contract. I have enclosed an example of an agreement which one of our employees has accepted. KiddiVouchers will keep a record of the date on which each employee accepts their salary sacrifice agreement.
Employees are permitted to join the scheme throughout the year and they may withdraw from the scheme or alter their requested voucher amount at the expiry of each salary sacrifice agreement. Changes in voucher amounts and withdrawal from the scheme may also be allowed in the event of a defined lifestyle change, such as the birth or death of a child, maternity leave or redundancy. During the period covered by each salary sacrifice agreement, employees have no right to leave the scheme or revert to their original salary except at a defined lifestyle change. Retrospective changes will not be allowed.
Payroll and Tax Implications
Employees are permitted to receive vouchers up to the limits defined above, on condition that their reduced pay is not below the current national minimum wage, national living wage or any other statutory payments to which they are entitled. The childcare vouchers will not attract any tax or national insurance contribution liabilities. For payroll purposes the original (pre sacrifice) salary figure will be referred to with the salary sacrifice shown as a reduction or deduction where applicable.
The employees’ payslips before and after the salary variation will provide evidence that salary changes have been effected at the right time and not applied retrospectively. KiddiVouchers will maintain a record of the dates on which childcare vouchers are paid to employees and the relevant voucher amounts, and this record is available upon request.
Enclosures
To help with your assessment, please find enclosed:
1. A copy of one of our employees’ payslips, before and after the salary sacrifice
2. A copy of the relevant variation to this employee’s employment contract
3. A copy of the scheme rules which explain in more detail how the scheme works.
4. A copy of the contract between <Company name> and KiddiVouchers.
If you would like any further information or if you have any queries, please contact me on <Tel>.
I should be grateful if you would confirm at your earliest opportunity that this salary sacrifice arrangement is effective for tax and national insurance purposes.
Yours faithfully
<Name>