Childcare costs are a big issue at present. With the government expected to release detailed proposals as a result of the Childcare Commission next week, Child Benefit being cut for higher rate tax payers and childcare costs being at the forefront in the recent Coalition mid-term review, it is no wonder parents are confused about how they can get help to reduce their childcare costs.
It is clear that there is a need for financial reform to make childcare more affordable for parents. To achieve this the government is looking at introducing tax breaks, raising child to carer ratios and increasing funded places for 2 year olds. Government also hopes this will make childcare more accessible and help parents back into work.
Childcare Vouchers, currently used by over 500,000 working parents, are one of the most popular methods used to help them save money on their childcare costs. The Childcare Voucher scheme has proved to be a successful method of reducing childcare costs, giving more parents the opportunity to work. In a recent survey** by Busy Bees Benefits, parents were asked “Do you believe the provision of Childcare Vouchers influenced your decision to return to work or remain with your current employer after you had a family?” 32.1% of respondents answered “yes”. One respondent said “Every bit helps – we save about £150 in tax between the two of us. I had to go back to work and there was no other benefit – so having this is essential”. Another parent who returned to work after maternity leave said “I had no alternative but I found out about [Childcare Vouchers] when I was pregnant and it eased my worries about whether I could afford to return part time. Thankfully I could!”
However, many parents are confused about Childcare Vouchers; not understanding how they work, the availability of the scheme and the benefits they provide. “I didn’t use them for the first year because I didn’t fully understand the benefits or think I was eligible for them”. There is a clear information gap. Parents should speak to their employer and childcare provider to ensure they know what help is available and the benefits Childcare Vouchers can provide.
Here is a simple 5 point guide:
- Childcare Vouchers are available to working parents via their employer who offer the scheme as an employee benefit to their staff.
- Parents simply register to the scheme, telling their employer how much they would like to deduct from their wages each pay period in return for Childcare Vouchers. Parents can currently exchange up to £243* per month.
- The amount exchanged for vouchers is deducted from their wages before tax and National Insurance is taken. This in turn reduces their salary which means they pay less tax and National Insurance.
- Parents then pay their childcare provider with the vouchers. They can be used to pay any registered childcare provider for children up to the age of 16.
- Through taking Childcare Vouchers, parents can save up to £933* per year on the cost of their childcare.
Busy Bees Benefits, a leading Childcare Voucher provider and part of the Busy Bees Nursery Group, understands the importance of providing quality childcare at affordable prices. Busy Bees Benefits is fighting to increase savings provided by Childcare Vouchers through their national campaign called ‘Mind the Gap – Raise the Cap’. The campaign aims to persuade the government to increase the current amount parents can take in Childcare Vouchers from £55 to £75 per week (£243 to £331 per month). If the campaign is successful parents will see the savings they can make rise up to over £1200 per year. To maximise savings, both parents can choose to use Childcare Vouchers increasing savings to more than £2400 per year.
To help support the ‘Mind the Gap – Raise the Gap’ campaign, Busy Bees Benefits has an online petition set up which can be signed here http://epetitions.direct.gov.uk/petitions/31669. Alternatively, Busy Bees Benefits has set up a tool to allow supporters to send an email to their local MP to make them aware of the campaign.
Whatever your childcare costs, saving money in this economic climate is important for families. For more information about how you can start saving using Childcare Vouchers visit www.busybeesbenefits.com or the HMRC website.
· *Basic Rate tax payers, subject to individual circumstances.
· **577 parents responded to the December 2012 Customer Survey.