When it comes to employer supported Childcare Voucher Schemes employees need to use them or lose them, before it’s too late. We asked Grass Roots’ ca
When it comes to employer supported Childcare Voucher Schemes employees need to use them or lose them, before it’s too late. We asked Grass Roots’ care-4 (a benefits provider and founder member of the Childcare Voucher Providers Association) to help us ascertain the three key things you need to know about employer-supported childcare voucher schemes.
Parents don’t realise that they can still register
“The advent of Tax-Free Childcare means that registrations for employer-supported childcare voucher schemes close for new participants at the end of March 2018. Yet many parents don’t realise that they can still register for their employer’s scheme right up until then, and it can continue to benefit them for years to come.
Working parents who join their employer’s scheme before the deadline can use their account and save money right up until the end of the August after their child’s fifteenth birthday (or sixteenth if the child has a disability). And for employers who haven’t considered running such a scheme, there’s still time to set it up before the first employee payment has to be made (31 March 2018).
It’s important for parents to do the maths
Comparing the childcare offers available means parents can check whether they will be better off with care-4 childcare vouchers, Tax-Free Childcare or another government provided scheme.
- Savings vary depending on the age of the child, so work out the best option over the lifetime of childcare needs
- Participating employees can add more children and carers, even after April 2018
- Savings are per employee and so if both partners are both eligible to join they should both sign up!
Tax-Free Childcare eligibility needs to be maintained
Parents registering for TFC will need to leave their current scheme, and will not be able to benefit from employer-supported childcare in future. And once they’re using TFC, they’ll need to remember to re-confirm their eligibility every 90 days. If they are not eligible, the savings will stop.
Are you an employer?
Whether your organisation has two employees or two thousand, you can still take advantage of this tax-efficient salary sacrifice benefit.
Once you’re set up with your chosen provider, which doesn’t take long, your employees can choose to have an agreed amount of their pre-tax salary paid into their account. They then use their online account to pay for qualifying childcare. Up to £55 a week is exempt from income tax and National Insurance Contributions (NIC).
- Employees can make a maximum monthly contribution of £243 to their care-4 account, saving up to £77.76 per month
- You can offset any running costs – and often more – with your annual Employer NIC savings of up to £402 per participating employee
- If you are eligible for 30 hours free childcare, you can use care-4 in conjunction with these to save on your remaining hours of childcare
- The value of these savings depends on the rate at which your individual employees pay tax.
Over 2 million UK families have benefited from the scheme, according to the CVPA. And if you haven’t yet set up a childcare voucher scheme for your employees, there’s still time for you and your employees to save money – before it’s too late.”