Childcare Voucher Refund Denials Cause Concerns

During the COVID-19 pandemic, many employees continued contributing to childcare vouchers through programs like KiddiVouchers, accumulating large balances. One user, having moved to permanent remote work, discovered they had accrued nearly £2,800 in their tax-free childcare account. They requested a refund from KiddiVouchers, but the provider denied it, stating their circumstances did “not meet the exceptional or unforeseen threshold.”

The voucher schemes, closed to new entrants in 2018, allow employees to pay for childcare with pre-tax income, offering significant tax savings. Despite a user’s employer agreeing to refund the amount after tax adjustments, KiddiVouchers persisted in their refusal.

KiddiVouchers’ parent company, Wider Plan, states that refunds are granted only in “unforeseen and exceptional circumstances.” Another impacted user, with £4,200 in their account, pursued a small claims process against Wider Plan, but the judge ruled that the company had exercised its discretion reasonably.

Vouchers remain valid until a user’s youngest.child turns 15 and can be used for various child-related activities. Wider Plan did not comment on individual cases, reinforcing their general policy stance.

Exploring Salary Sacrifice Benefits

Salary sacrifice schemes allow employees to allocate part of their gross salary toward various benefits, often resulting in tax savings. Common uses include pension contributions, gym memberships, and childcare vouchers. Other possible benefits under salary sacrifice include company cars, mobile phones, laptops, and health insurance.

While salary sacrifice can reduce taxable income, it may also impact entitlement to benefits like state aid and loan applications. Employees are advised to check with HR departments regarding specific benefits and their implications.