Making sacrifices for little Louis or Louisa

THERE is one thing guaranteed to put a strain on most household budgets – regardless of any credit crunch.

Having a baby is certain to leave the vast majority of families feeling the pinch.

While nappies, cots, clothes, pushchairs and other paraphernalia are expensive enough – they’re a tiny fraction of the total cost.

For most couples the main financial pain is either the loss of one income or the cost of childcare.

It’s little wonder. The average full-time nursery place costs around £160 a week with registered childminders commanding similar amounts.

But for working couples the government’s Childcare Voucher Scheme is a way to reduce that expense by up to £2,400 a year.

In the current financial climate that could be the difference between making ends meet or not.

Childcare Vouchers are simple to apply for and can be redeemed at any registered nursery or used to pay child minders or for after-school clubs, again provided they are registered.

And it is not just the parents of toddlers who can benefit. The vouchers can be used to pay for care for children up to the age of 16.

To receive the vouchers parents must apply to make what is called a "salary sacrifice".

While this sounds painful all it means is they agree to give up some of their weekly wage or monthly salary in return for vouchers.

So their weekly wage packet will shrink by up to £55 or their monthly salary cheque will be up to £243 smaller but the difference will be paid in vouchers. The big benefit is that the scheme is exempt from tax and national insurance. So a basic-rate tax payer stands to gain £31 for every £100 they swop for vouchers – or £900 a year while a top-rate tax payer stands to save almost £1,200.

What is more, if both parents are working they are both eligible for the scheme.

Companies offering their staff vouchers also save money as they no longer have to pay National Insurance on the sum paid as vouchers so there is little excuse for firms not to offer them.

The only downside to the scheme is that you have to be an employee to take part. This has meant temporary and agency workers have been excluded. At least until now.

But now a payroll administration firm called FPS Umbrella has found a way to help them benefit too.

The company, which is part of Charterhouse Group International, has teamed up with Busy Bees, which has 130 nurseries across the country and administers childcare voucher schemes for 10,000 companies including Royal Mail, Sainsbury’s and Boots.

FPS specialises in providing payroll administration services for temporary staff, invoicing the agencies and paying the workers who, crucially, become its employees and therefore elligible for vouchers.

FPS operations director Sandra Robertson uses the example of an agency nurse.

"She might work for three or four different agencies in different hospitals and old people’s homes.

"The agencies are all paying her different amounts at different times. It can be hard to keep track of what has been paid and what is outstanding and very hard to budget.

"These kind of people don’t tend to be experts at paperwork and often struggle with tax returns.

"We take away all those headaches. They receive a single pay cheque from us and we calculate their tax and national insurance contributions for them."

They are believed to be the first such umbrella organisation to offer Childcare Vouchers. Others are widely expected to follow suit making it easier for temps and contractors to benefit from the scheme.

By Clinton Manning

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