How do childcare vouchers work for a child-minding setting?

When setting up your childcare setting there are many things you need to take into consideration; the location, how many staff you may or may not require, how many children you can legally accept and are there any alterations to the setting required. But you also need to think about how you will get paid.


Most childcare settings are set up so that parents can either pay via cash, bank transfer or even through childcare vouchers. But how does this work for childminders?


Childcare vouchers have been made available through a parents’ wage packet to provide benefits to both the organisation and the parent. While the parent can make savings in the amount of provision they pay for – up to £1,000 in some cases thanks to the vouchers being exempt from NI and tax – the childcare setting accepting them know they are guaranteed payment, so long as they are registered or approved.


By being a registered childminder (eg CSSIW, Ofsted & Care Commission) you will be eligible to become affiliated with one of the many childcare voucher companies available. Once you have this system in place you should advise the parents or guardians of the children in your care which voucher scheme you have signed up with. If you only have a few families it may be worth discussing it with the parents first so you can make sure you sign up to a scheme that their employer works with.


In the first instance you would need to inform the parents your account or reference number from the childcare voucher company. You do not need to give them your bank details, unless the voucher is only part payment for your services.


Once everything has been set up between you, the affiliate, the parents and their employer, you can start accepting vouchers. These are usually paid via a bank transfer however in some cases you may receive a physical voucher that will need to be redeemed either by post or online.


Depending on which voucher provider you have chosen you should receive a direct bank transfer (BACS) or cheque, usually within 4 working days after the parent has requested the payment. It is imperative for your business records that you keep full records of all payments, vouchers and parents information for future reference.


Sometimes you may receive a payment for more money than is required for that month’s contracted childminding hours. If this is the case you can either reduce the amount from the next month’s quota or ask the voucher company to carry the amount forward as a credit on their next month’s invoice. You can also arrange a refund back to the parents.


As with all financial aspects of a business you must keep clear records, especially for tax return purposes. If you are a childminder and not sure what you should or shouldn’t keep, or if you are struggling with the financial requirements of being a childcare provider, contact us for an informal chat about your accounting needs. We offer a range of services that include accountancy, tax and pensions.

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