From 6th April 2005 the Government allows £50 per week (£217 per month) tax free when being paid directly for childcare by the employer. This can be used towards daily childcare for under 5s or after school care and holiday care for all ages. If both parents are working that is a possible £434 per month as tax free salary. It is very easy for employers to join a voucher scheme; there are several, and information is available on a number of websites, for example: Childcare Vouchers Direct and Busybees. Once you have registered, employees can begin to receive part of their salary as 'tax free' childcare vouchers. £2604 @ 22% for employees at basic tax rate is a saving of £572.88 for them or £1041.60 if they are a higher rate tax payer. *12.8% National Insurance Contribution saved for employers* The NIC part of your employee's salary sacrifice is not only saved by them, but also by you. £2604 @ 12.8% = £333.31 saving for employers, per year, per employee.