CHILDCARE VOUCHERS – WHAT’S CHANGING?
Your Tax Shop clients are asking about upcoming changes to the Childcare Voucher Scheme. They also currently offer this scheme to their staff so will we as employers need to make any changes?
Employers regularly offer the childcare voucher scheme as a way of supporting parents within their organisation. The tax-free scheme has long been popular with working parents, allowing eligible individuals to earn up to £55 per month in childcare vouchers by way of salary sacrifice. However, given the forthcoming changes, there are some things Your Tax Shop and their clients should consider.
Your Tax Shop, based in Tameside, and its clients can continue to offer the current scheme to eligible staff, however, it will only be available to those who sign up before 4th October 2018!
From this date onwards, any new applicants will only be eligible for the government led programme which requires no involvement from employers. This new scheme instead asks individuals to deposit funds into an account on the HMRC website, and the government will also contribute up to £2,000 per child per year.
Alternatively, employers may take this opportunity to cease their involvement in the employer-led voucher scheme altogether, as this is totally voluntary, in an effort to make things more equal for all staff. However, they should consider how this will be received by those who currently benefit from it, particularly if this forms part of an attractive benefits package.
Whichever way Your Tax Shop and its clients decide to proceed, it is important that they inform their employees appropriately, using a combination of emails, promotional posters, and informal meetings. If employers plan to continue offering the scheme they should encourage interested staff to apply as soon as possible, as they must have received the first set of vouchers prior to the cut-off date if they are to be able to use the scheme.
Employers should amend any existing policy on childcare vouchers to make staff aware of the new options available to them. Human Resources and payroll departments will also need to work in unison to ensure only those eligible for the employer-led scheme receive the relevant salary deductions going forwards. Line managers must also be educated on the available options, allowing them to deal with disgruntled staff who may feel that they are missing out as a result of the new scheme.
Some commentators have suggested that the government led scheme could lead to some parents losing out on funds that would have been available to them under the employer-led scheme. If Your Tax Shop and its clients are concerned about this they may consider other efforts to support working parents in their organisation, such as partnering with a local nursery to see if an arrangement can be made to offer staff discounted rates for childcare. However, they are under no obligation to do so.
Ultimately Your Tax Shop and its clients can decide whether to continue providing childcare vouchers to those who sign up before October’s deadline. If they wish to change their approach, then they will need to ensure staff are informed in good time and those workplace policies are amended accordingly.
Should you require any further information please contact one of the team at Your Tax Shop based in Ashton-Under-Lyne, Tameside on 0161 339 5689