Childcare Voucher schemes are set to change after the government announced proposals to help more working parents
meet the cost of childcare.
The new Tax-free funding scheme, announced on 19th March, will replace the
current salary sacrifice scheme that is used by around 500,000 working parents. It will be based on a subsidised funding model; for every £80 a parent pays towards childcare, the government will pay £20 towards their childcare fees. There will be an annual limit to this scheme, the government will pay 20% of childcare costing up to £6,000 per child, per year - giving parents a contribution of up to £1,200 per child, per year from the government.
Under the new funding scheme, parents will be able to choose
their own voucher provider as it will not be a salary sacrifice scheme operated
through their employer. This will remove the administrative work that surrounds
the current childcare voucher scheme, as employers will no longer need to make
the deductions from their employees’ salaries.
John Woodward, Managing Director of Busy Bees, said: “We are
pleased that the government is continuing to support working parents and
recognise that the cost of childcare is a huge burden to parents. The
new system will not only save recipients more money compared to childcare vouchers
but it is also estimated will benefit around twice as many working parents.
“Busy Bees Benefits is delighted to embrace the new scheme and
is well placed to offer it directly to parents due to our ability to adapt to
the new market, our innovative online systems and our existing relationships
with clients - not only those who already use childcare vouchers, but those
19,000 parents whose children attend one of the 213 Busy Bees nurseries every
week.”
Offering a childcare voucher scheme has been an attractive
option for employers because it is a cost-neutral benefit that can save them
money by reducing their employer National Insurance contributions. This will no
longer be the case under the new scheme. However, the less tangible benefit of
keeping skilled parents on the workforce, and attracting those parents who want
to work, will surely be welcomed.
Although businesses will no longer be a part of the chain in
supporting parents with childcare costs, it is still in their interest to
communicate with employees about the potential savings available to them and the
introduction of the new funding scheme.
Childcare vouchers, first introduced in 1998, have been an
important factor in supporting parents who work. According to research in
November last year by Busy Bees Benefits, 1 in 3 parents said that the
provision of childcare vouchers influenced their return to employment.
Until the new Tax-free childcare scheme is launched Autumn 2015, employers should continue to offer their staff
childcare vouchers. Those organisations which do not currently have a scheme in
place are still able to set one up and enable their company and staff to take
advantage of savings available as well as giving parents the option when
available to the most tax efficient method of paying their childcare fees.
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