What are the changes?
The Government will launch the Tax-free childcare scheme in autumn which will see them subsidising 20% of a child’s childcare on costs of up to £10,000 per year, providing savings of up to £2,000 per child. Parents will pay into an account when they are using childcare and the government will add the additional 20%. Once this scheme is launched, no parents will be able to join the existing Government backed Childcare Voucher scheme.
Used by more than 500,000 parents in the UK, Childcare Vouchers are a key tool to help parents back into work after having children as they provide savings of up to £933 per parent, each year. Childcare Vouchers are operated through a salary sacrifice scheme, where a portion of the employee’s salary is deducted in exchange for childcare vouchers. These are then placed into an online account from which you pay your childcare provider(s) directly.
Which scheme is better for me?
There are key differences between Childcare Vouchers and Tax-free Childcare.
Tax-free Childcare is available for children up to the age of 12. Two parent families where one parent works will not be eligible for Tax-free Childcare. In contrast, Childcare Vouchers can be used for children up to the age of 15, (16 if disabled) and two parent families where one parent works are eligible.
Under the new scheme, many parents will be worse off, including middle-low earning parents, families with only one working parent, families using childcare for only a few days a week and those who have children in childcare over the age of 12. Leading Childcare providers have been assessing which schemes are more beneficial for parents and have found that at least 80% of parents will be better off continuing to use Childcare Vouchers after Tax-free Childcare is launched in the autumn. Therefore, now is the time for you to join the Childcare Voucher scheme to ensure you protect your rights to be able to choose whichever scheme is best for your family when the time comes.
Petaurum Solutions Comment
If you are thinking about innovative ways of rewarding your employees, then our great employee benefits schemes are a great way of doing this. If you want to provide your employees with the best possible range of options for childcare schemes, as detailed above, you will need to act now as time is running out. Contact us to find out how easy and quick it would be to get your scheme up and running
This information is intended as a general overview and discussion of the subjects dealt with. The information provided here was accurate as of the day it was posted; however, the law may have changed since that date. This information is not intended to be, and should not be used as, a substitute for taking legal, HR or benefits advice in any specific situation. Petaurum Solutions is not responsible for any actions taken or not taken on the basis of this information. Please refer to the full terms and conditions on our website.