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Childcare voucher providers: cost to employers

August 19, 2008 36 Comments

Childcare voucher schemes - the government's scheme where you sacrifice some of your salary in exchange for an equal amount of childcare vouchers - make sense for employers and employees. Employees don't have to pay tax or NI on the vouchers. And employers don't have to pay employers' NI. So savings all round.

Childcare voucher schemes: employers' costs

Employers will have to pay a company to administer the scheme (but this cost is less than the NI saving). Here's a list of the companies and how much they charge (remember, you'll save more than this in NI).

Accor, Busybees, Sodexho etc childcare vouchers: administration costs

For some reason companies are reluctant to put these figures on their websites. All figures are for a one-person childcare voucher scheme.

  • Kiddivouchers - 2.5%
  • Voucher solutions - 4%
  • Early years vouchers -From 5%
  • Kids Unlimited - 5%
  • Gemelli - 5%
  • Sodexho / - 6%
  • Accor Services Childcare Vouchers - 7%
  • Vouchers4Kids - 7%
  • Employersforchildcare-  7%
  • Faircare - 9%
  • Busy Bees - still waiting for call back

So there you have it. The cost of running a childcare voucher scheme is between 2.5% and 9%. I can't quite see why you would look beyond Kiddivouchers or Voucher solutions myself.

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  • Ben says:

    Hi Malcolm,

    Maybe it's also a good idea to cover other factors, such as the provision of vouchers online, easy management of scheme, promotional help, telephone and online suppprt, along with a great rate of course.

    You missed one too: Early Years Childcare Vouchers, - these guys are 5%.

    Thanks for the post

  • “Employers will have to pay a company to administer the scheme.” Not so! It’s very simple for an employer to run its scheme itself, using templates available on the market at a fraction of the cost charged by voucher providers.

  • steve says:

    You missed out these guys - these guys are 3.75% and provide online and paper vouchers

  • Paul Gilson says:


    You missed one that does have the costs on its website CLARICARE Childcare Vouchers, the only one to be transparent. With costs starting at 2.5% check it out.. or

  • Andrew Potts says:

    Thank you Malcolm. You provided exactly what I was looking for - the comparable running costs of the schemes - which nobody seemed to want to provide on their websites! And at first glance Kiddivouchers looks ideal; I doubt I would have found them without your site. Thanks again.

  • Ross Dunlop says:

    I like your article, but there is also the "Employer Direct Payment Scheme". Does not involve any vouchers but provides the same tax/NI savings under a different section of legislation.

    The scheme costs £299 with us and there are no further costs. We also arrange for HMRC compliance approval, often not provided by voucher companies. Also improves an organisations cash flow as they do not have to pay in advance for vouchers.

    A very popular alternative, being used by large Public Bodies like City and County Councils, who wish to acheive maximum savings and in several cases has replaced poor performing voucher solutions.


    • Melanie Hunt says:

      I was interested in your comment about the Employer Direct Payment Scheme - you said that the scheme costs £299 with us - but then never went on to tell us who that was - could you direct me to somewhere so I can find out more information about your scheme.


      • Ross says:

        Hi Melanie

        I developed the scheme with my previous employers who were bought out 2 years ago. They no longer provide the scheme, as the purchasers already had a voucher scheme.

        I no longer promote the scheme myself, as companies were having difficulty understanding how it worked.

        If you wish I would be happy to email you some information and you can decide if it would be suitable for your requirements.

  • Gina says:

    You missed this company also. They provide a great online system for a very competitive commission fee of between 2% and 3.75% depending on the size of the organisation.
    Very simple to register, only take about 5 minutes, check them out!

  • Eoin says:

    Hi Malcolm, excellent article.

    In response to Anthony Rentoul, I would like to point out that experience does count for a lot in these sorts of schemes. Running one yourself is certainly an option, but it doesn't necessarily mean you will save money. Of course you won't have to pay the admin fee, but you will still have to administer the scheme, which does have a labour cost attached to it.

    I think that these childcare voucher providers do provide value. Personally I was with one of the big ones before, but I found them impossible to deal with, often they did not answer the phone and left me chasing them. I notified my company and having had other complaints they changed their provider. Now we're with Childcare Voucher Solutions ( and they guarantee to answer the phone within 3 rings and are very helpful.

    Overall I would say that I am very impressed by them, and I find it a lot less stressful (kids are stress enough without extras!).

    Hope this helps someone,


  • Great information here and this has opened our eyes here at Bolton Nurseries. We have been using Busy Bees for our local nursery and some of the parents seem to use these.. i will try to find out from them the percentage.. but maybe it's time we recommended kiddivouchers!!

    • Eoin says:

      Hi Bolton Nurseries, if you are looking based purely on a cost basis you will find that are the same price, however, I must advocate their service, which is why I have stuck with them.

      Hope this helps, if you are just accepting them, then I don't think it matters which one you use.


      • Bosslady says:

        I had requests from Employees to set up a scheme, we were just about to do so when our payroll provider alerted us to the fact that we would have to pick up the cost should their salaries fall below affordable amounts. This could be due to Mat pay, SSP or unpaid leave (extended Mat pay) as we are a smallish business I could not take the risk especially with the change to maternity arrangements looming whereby male employees can share in the allowance if they so wish. I was not popular at the time but couldn't risk the impacts i.e. employee not doing anything wrong by taking advantage of an option available to them. I have to say I found it incredulous that anyone could think it fair and proper that Employers should be responsible for someone else's childcare - however was this part of the legislation allowed to occur!
        PS when I contacted Computershare to enquire they were VERY reluctant to admit this. They did try to defend matters by saying that if a person was at home in any case why would they then send their children to a childcare provider. Anyone who has had a child will know that a few hrs to yourself not to pamper and preen but to get all the essential household chores up to date is a very attractive prospect especially if your Employer is paying!

  • Ross says:

    One point to note is that organisations have become nervous about offering childcare benefit schemes.

    Since either a voucher, employer direct or workplace nursery scheme is termed a non-cash benefit, an employee is entiled to continue claiming the benefit, even though they are unable to pay for it.

    This leaves the cost to the employer who may have to fund a whole year of maternity leave (52 weeks) at their own cost. It also begs the question whether an employee is entitled to join a voucher scheme the day after the birth of their first child ? with the cost being picked up by the employer again.

  • Nicky says:

    I used busy bees for a number of yours. They are now back as busy bees benefits and are very competitive in the Market an offer an amazing service. They also offer 5% discount on the voucher value If the parents one of their 130 nurseries which is a really good benefit. They are always there to help and are a pleasure to deal with. Ive used kiddivouchers before but they never offered a good service, busy bees Market the scheme for you free of charge all year, give you a dedicated account manager the companies offerin 2.5% for one parent order haven't got many staff themselves so can not offer the same service. I Wouk recommend busy bees to any one if they have 1 or 100000 employees.

    • Percy Millbanks says:

      Nicky, you can barely spell, so it doesn't surprise me that you have missed a great deal of very obvious facts.

      Where you say KiddiVouchers never offered a good service, you are outnumbered in this opinion by a ratio of 45,000:1, that's a fact. That's the number of satisfied parents using KiddiVouchers. If you are speaking from the point of view of a business you are outnumbered 4000:1. Your comment is vague and insupportable; you are simply trying to cast aspersions on possibly the best company in the industry, which is why I suspect you are a Busy Bees employee.

      It's also a fact that KiddiVouchers "market the scheme for you free of charge all year, give you a dedicated account manager" and charge only 2.5%, so what you have pointed out as differences are actually similarities.

      Come back with evidence of being treated poorly, I'm sure the community would be very interested.

      I personally have dealt with both Busy Bees and KiddiVouchers and the level of customer service with KiddiVouchers is far better, and consistent.

  • Disagreement's fine but let's try not to be personal, thanks.

  • Eoin says:

    I'm not sure I understand the statistics that you have provided. 45,000:1 seems like quite a large number of satisfied customers at Kiddie vouchers compared to Busy Bees. Are you saying that Kiddie Vouchers have 1 unsatisfied customer for every 45,000 or that they have 45,000 customers for every 1 of Busy Bees?

    What does in business terms it's 4,000 to one mean?

    As for best company in the industry, well that's a matter of opinion, as stated I preferred my choice.

    What is a dedicated account manager? Surely all of the companies offer this? Don't all of the services market their schemes too?

  • Percy Millbanks says:

    I apologise for my earlier remark about Nicky's spelling (one of my pet-hates but irrelevant to this thread).

    Just to clarify those statistics - these numbers come from figures quoted to me by KiddiVouchers about six months ago when I was looking to implement a scheme: 45,000 parents were using their services at the time, and over 4000 businesses. They also had a 100% client-retention rate, so, added to the fact that they impose no tie-ins, I assumed all of these people were quite happy with them.

    On the other hand, Busy Bees have become notorious for being difficult to contact and for simple tasks taking much more time than they should. I will add here that I am more than a little confused about who Busy Bees are. Are they the same company as Computer Share, a chain of nurseries, or both? Either way, I didn't want to use them as they vary their fee depending on the size of one's business, effectively penalising smaller businesses by charging up to 8.5% as opposed to KiddiVouchers' 2.5% across the board, plainly quoted on their website instead of hidden like most other providers'.

  • Eoin says:

    Amusingly Busy Bees do not have a price listed above, "still waiting for call back".

    I cannot see that Kiddie Vouchers have a 100% client retention rate, that's almost impossible regardless of what business you are in.

    I've also been told that some providers have hidden rates in some cases, so I was little suspicious.

    One final consideration that Childcare Voucher Solutions pointed out to me is that some providers do not ensure they have sufficient funds offset to cover the vouchers. i.e. if they went bust in the recession you'd lose your vouchers. I thought that was an interesting take, they apparently have a completely separate account to offset this possibility.

    • Ross says:

      This point is quite correct. HMRC have taken a view that any non-cash benefit you give to staff will fall into this category. So it also includes any benefit provided in exchange for a salary sacrifice.

      I would like to point out that an employer provided childcare scheme has slightly less risk attached than a voucher scheme. The reason is that the HMRC rules state that childcare must take place in the tax week for the benefit to be paid.

      In the case of a voucher scheme, then a voucher can be purchased in any tax week up to £55.00, but does not need to be used in the week it is purchased. This allows employees to accumulate vouchers for use in the future.

      I was made aware that large companies have taken the view that an employee could join the scheme on the day the baby is born. I was made aware of one company who does this, but am unable to confirm this.

      Hope this helps.

    • Percy Millbanks says:

      Eoin, it surprises me that any childcare voucher provider could fail to have enough funds to credit vouchers as it's the employees' money. Why would they have to find this money elsewhere? They surely take it from the employer and credit the parents' accounts, and charge admin for this, further covering themselves from going bust.

      I'm pleased to say that my provider has a ring-fencing plan and a comprehensive contigency strategy covering all possibilities, including natural disaster, pandemic, bank system failure, server failure, and bankruptcy. They appear to have thought of everything.

      • Eoin says:

        I'm not entirely sure it's a completely ridiculous suggestion, the banks use our savings to lend to people at higher rates, why wouldn't a company with a large amount of funds use it whilst it awaits collection by the Childcare provider? There may even be a few days transfer as is common in other industries.

        To be honest it's purely speculation on my part, but if a company has revenue coming in, and costs outweighing them then it doesn't seem unreasonable that they may use the cash flow to keep the business churning.

        • Eoin says:

          Glad yours has protected you though, but it's worth knowing for sure :)

        • Ross says:

          For clarity purposes and having personal experience of running large childcare benefit schemes in the Public Sector it works like this.

          Each client is designated a "client bank account". This is an account specifically allocated to hold their funds, ready to settle all voucher costs. These accounts are ring-fenced and it is normally in the name of the client. Should the business fail, then an Adminstrator is unable to touch these funds. They are automatically returned to the originating client's bank account.

          You should never deal with any organisation who asks for the funds to be credited to their own operating account. It would also cause them problems as it muddy's the water for VAT purposes.

          A point was raised in relation to stock piling vouchers as I mentioned before. An employee would be able to receive a refund for the face value of the voucher, which in turn would be paid via their payroll. Most voucher companies allow up to 6 months for this arrangement to happen. Again, if your voucher company does not offer this facility then you should be wary of this.

          In order for an employee to receive the refund value they would have to remove themselves from the scheme, as the salary sacrifice arrangement, has in effect broken down, under HMRC legislation.

          These schemes are far from complicated from running as long as you understand the processes and legal requirements involved.

          Hope this helps anyone considering a new scheme.

  • Percy Millbanks says:

    I believe the maternity issue would only apply to mums who already have children and are expecting more.

    In that case, the mother might actually need to provide some childcare for their existing children, and might not really be taking advantage by stockpiling vouchers for later use. I would imagine that, as the vouchers can't be redeemed for cash, only very few people would go through with this purely as a hustle, and that the hustle would doubtless entail something like befriending a crooked childcare provider who will agree to exchanging the vouchers for cash (which is illegal, right?).

    I believe the legislation allows for quite a nifty solution, which is for the employer to compensate the parent for their lost savings, not the entire voucher amount, during the period where the parent is receiving statutory maternity pay only. It still involves paying out additional funds, so may not be as desirable as saying, "no!" from the employer's point of view, but it seems safer* than denying the parent vouchers. I think the maximum tax a parent can save through these schemes is around £75 per month, based on the full entitlement of £243 per month.

    As an employer, I would quite likely go for this option.

    *Presumably the threat faced is that of parents filing a discrimination claim?

  • Percy Millbanks says:

    Oh dear, I've just found out that Fideliti are still touting 100% client retention in the "news" section of their website.

    "Fideliti continue to grow while maintaining 100% Client Retention" it says...

    For the record, a good friend of the family works for Cheshire Police, who moved their scheme away from Fideliti over six months ago now.

    Apart from this, Fideliti might be fairly good. The only let-down, perhaps, is that their branding looks oddly similar to TESCO's.

  • Eoin says:

    The logo doesn't seem that close to me.

    I guess the retention claim is no worse than the claim Kiddie Vouchers make. I really can't see that any business has 100% client retention.

    • Percy Millbanks says:

      Eoin, I've just checked. KiddiVouchers do not claim 100% client retention.

      I agree it's unlikely that any really do by now.

      By the way I didn't mean Fideliti's actual logo: my comment that their branding looks like TESCO's was because their website, with its blue and white colouring and hot pink circles, make you feel like you're visiting a site that has something to do with TESCO, as this (by now over-mentioned) supermarket use very similar red 'price' dots with their blue and white theme.

  • Tony Clegg says:

    what are there rates? Anyone? Would be grateful- have heard they are exeptionally good, well have good customer service.

  • Susan says:

    My employer has recently signed up for computer share voucher services and I am the only one in the scheme, taking the full amount of tax free vouchers so £243 a month. They have advised me that as I am the only person in the scheme the admin charges are higher than the NI savings so they are making a loss, is this accurate?

    • Ross says:

      An employer who introduces a scheme will save secondary National Insurance contributions on the amount of value you sacrifice. In this case you sacrifice £243 per month for 12 months each year.

      Therefore an employer on average saves 10% of this amount which is approx £300.00 They are likely to be charged 5% of the voucher face value. Approx £150 to £160 per year. With internal costs they may consider it to be in excess of £300 per year.

      So in reality they are probably loosing money.

      Hope this helps.


      • Percy Millbanks says:

        Hi Susan,

        To me, it sounds more like yet another classic case of ComputerShare charging smaller businesses a higher rate than larger businesses, making it less economical for the smaller employer to run a scheme.

        I can't understand why any business would sign up for a salary sacrifice scheme where they are losing money by paying out more in admin than they save - not when it's widely publicised that a company is supposed to save money with a voucher scheme.

        I suspect your employers are paying a heavy premium for the scheme, and can do without the excessive admin legwork foisted upon them by the aforementioned voucher sharks* so whilst I can't imagine even ComputerShare would be audacious enough to charge more than the NI saving (13.8%), your employers are probably worried about the man-hours being wasted on running the scheme, combined with the "through-the-nose" pricing, making them completely fed up with it.

        And who wouldn't be? *ComputerShare, despite charging the most that any provider have ever been known to, actually make the employer do a lot of the administration related to running a scheme. Think of it as running a scheme in-house but still paying over-the-odds for a little rubbish assistance.

        If the employer had opted for a scheme from KiddiVouchers for example, or Fideliti, or one of the other decent ones, they would only have had to pay a monthly invoice, and other than that, relax! KiddiVouchers, who I have worked with, charge 2.5% across the board, whether your company has 1 or 20,000 employees.

        Under these circumstances, an employee ordering the full £243 per month would save the company £402 per year. This equates to about £87 per year in admin fees, which is less than half what a voucher account costs, and less than half of what P&MM charge per year (to give just one example).

        Perhaps you should ask your employer to look at the market before giving up on a scheme altogether. Not all providers are totally rubbish!

        • Eoin says:

          Agreed Percy, it is also important to note that the above rates are from a few years ago, and things will have changed.

          In particular the scheme has changed, and we have also entered a recession, so rates will have changed and providers will have changed.

          Having worked with Childcare Voucher Solutions and being a small company I actually found that they were quite willing to work with smaller companies.

          • Percy Millbanks says:


            Fair point, just to assure you I did check the figures I quoted in my own comment are currently valid.

            Most of the companies have actually brought their costs down recently, if only a little, or have diversified their offering because of the increasing demand for all-singing all-dancing reward platforms.

          • Eoin says:

            I believe that Childcare Voucher Solutions may have differing prices determined by company size, as they were so reasonable to me, and because larger companies surely have larger administrative costs, I imagine that small companies probably find their rates more reasonable, but large companies save more money overall. You'd have to ask them to be sure, but that would seem logical to me.

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