Friday, 11 January 2013

Solving Childcare Affordability Doesn't Have to Mean Reinventing The Wheel

A press release from the CVPA:

“Solving childcare affordability doesn’t have to mean reinventing the wheel.  With a few simple changes to the childcare voucher scheme, Government could give working parents the support they need.

We have been working with Government to increase childcare support.  Childcare vouchers can be expanded to include self-employed parents, those on the national minimum wage and through introducing a right to request.”

·         Childcare vouchers help the Government provide targeted support for working parents and especially enable a significant number of them to return to work.  Industry data, independently conducted by the Social Market Foundation, demonstrates that over 80% of childcare voucher users are basic rate taxpayers.  The amount which can be sacrificed is flexible, so Government has the power to increase the difference between the tax bands so as to make the scheme as progressive as possible.

·         Over half a million working parents use childcare vouchers for registered nurseries, childminders, before- and after-school clubs and holiday camps.  Findings from an industry survey demonstrate that 17% of childcare voucher users would be forced to leave work and 38% would have to reduce their working hours should the tax exemptions on vouchers be removed.

·         Government could easily, efficiently and effectively increase this support to ensure that all working parents are provided with help in returning to, or remaining in work. 

·         Two simple changes could be made to the childcare voucher scheme to increase the support it provides:

  1. In order to increase access to the scheme, the system could be strengthened by introducing a ‘right to request’ for employees. The introduction of such a ‘right to request’ could mirror the provisions previously put in place around flexible working and would reinforce the support working parents receive for their childcare costs.
  2. Those who are self-employed are currently unable to benefit from childcare vouchers.  The scheme could be easily adapted to ensure self-employed parents are able to receive the same childcare support as parents in other types of employment.

·         The voucher scheme is simple, efficient and does not place any administrative burden on the Government, so implementing these changes would not add any overhead costs for the taxpayer. In contrast, any new tax break scheme is likely to bring more people into the self-assessment regime.

·         Once these are in place, Government could amend the weekly tax exemption salary sacrifice limit in line with its intended support for working parents.

1 comment:

  1. I guess this childcare vouchers are great help to parents. The two simple suggestions /changes mentioned are doable. It does not bring negative result to both parties but a win-win to both.