Armed Forces set to benefit from Childcare Voucher Scheme

From December this year members of the Armed Forces will be able to convert a proportion of their salary into childcare vouchers. This will allow them to make significant tax and National Insurance Contributions savings. The vouchers can be used to pay for registered childcare by childminders and in creches, nurseries and holiday clubs.

The scheme is based on a salary sacrifice mechanism whereby Service personnel can elect to reduce their cash salary in favour of childcare vouchers. They will only pay tax and National Insurance Contributions on the cash salary they receive and so can make savings of up to around £1,200 per year. This system is in widespread use across the public and private sectors.

Defence Minister Derek Twigg said of today's announcement:

"We continually look to improve the support for Service personnel and their families, and we are fully aware that childcare is an important consideration for many of our people. I am delighted to announce the introduction of a Childcare Voucher Scheme.

"There are some substantial financial benefits for those that want to join the scheme. This is another step in ongoing efforts to ensure that we provide the best possible support to our personnel and their families, on operations and at home."

The launch of the Armed Forces Childcare Voucher Scheme is part of the continuing programme of improving support to Service personnel and their families. There has been a high level of interest in this scheme from the Service community, all of whom have had regular updates on progress through MOD websites, information organisations, the chain of command and Families Federations.

Kim Richardson, Chair of the Naval Families Federation, said:

"On behalf of the three Services' Families Federations can I say that we are delighted that the Scheme has come to fruition and look forward to meeting families in 2008 and hearing about the difference it has made to them."

The contract to provide the scheme was won by Sodexho Pass Ltd after a competitive tendering process. Sodexho Pass Ltd is one of the largest providers in the UK of childcare voucher schemes. The contract will provide access to childcare vouchers for Service personnel worldwide. A similar scheme for civilian staff, operated through the new civilian staff pay system, is planned for spring 2008.