Is there a cost to the company?
The direct cost to the employer is simply the service charge at the rate you are set. VAT ceased to be recoverable on 1st January 2012, due to an HMRC clarification recently, unless the De Minimis rule can be applied.
VAT does not need to be charged, or acounted for, on the sacrifice amount as childcare is exempt.
There is a small % charge based on the amount of requests made using the service
However, the company makes a substantial saving per employee as the requests are NOT subject to employers NI, currently 13.8%.
If you think of a voucher at £100, you would save £13.80 in NI but lose about £0.80 on 4% management fee as you cannot reclaim the VAT, net saving of £13.00. So the service actually costs the company NOTHING, in fact the company makes a saving offering the scheme.
See the chart to see your NI savingsBack to Frequently Asked Questions