The new financial year is looming and Busy Bees Benefits is helping customers to ensure their Childcare Voucher scheme continues to meet HMRC rules.
All employers offering Childcare Vouchers to their staff are required to carry out Basic Earnings Assessments annually.
By providing customers with an updated, electronic Basic Earnings Assessment (BEA) tool via their online account, Busy Bees Benefits is making it as easy as possible for organisations to administer their Childcare Voucher scheme at this busy time of year. The service also ensures employers’ schemes do not become invalid, which would mean there would be no entitlement to tax relief.
Childcare Vouchers are a simple way that working parents can save on the cost of childcare. It’s just a matter of swapping a part of their salary for Childcare Vouchers, which are non-taxable and exempt from National Insurance contributions. If parents take the full amount of vouchers available to them, currently £55 per week, they can save up to £933 each year.
Although the majority of parents use vouchers for registered childcare for pre-school children, be it a nursery, nanny, au pair, or childminder, Childcare Vouchers can also be used for older children to pay for schemes such as out of school clubs and activity camps.
The amount of vouchers each employee can exchange depends on their tax band. This was introduced three years ago to make the system fairer. Parents who joined the Childcare Voucher scheme after April 2011 can only exchange the maximum allowance of £243 per month or £55 per week if they are Basic Rate Taxpayers.
When completing the Basic Earnings Assessment each year, the employer is required to confirm whether each employee is a basic, higher or additional rate tax payer and if their Childcare Voucher order is in line with the amount they are able to claim. BusyBees Benefits’ straightforward Childcare Voucher system asks employees to complete a basic earnings assessment online:
- Employees are asked to input their tax code, gross income and details of any other salary sacrifice schemes they use and the system instantly assesses whether the individual is a basic, higher or additional rate tax payer and ensures the correct amount of Childcare Vouchers are requested.
- The system also provides an online storage system so these details can be readily retrieved when required.
The HR and Payroll Advisor at a UK college said “After a meeting with Busy Bees Benefits we agreed to switch to our scheme as their system was easy to use and removed much of the administrative burden for our payroll staff.”
Employers must also ensure that no employee’s salary drops below National Minimum Wage levels after their Childcare Voucher has been deducted. Busy Bees Benefits has again used its innovative system to deliver full compliance.
Employees who were registered on a Childcare Voucher scheme before 6th April 2011 and have taken at least one deduction for Childcare Vouchers in each tax year since then, can still order the full allowance of £243 per month, whatever their earnings. Changing voucher provider will not affect employees’ protected rights. Changing employer, other than TUPE transfers, will mean they lose their rights. Busy Bees Benefits informs employees with protected rights if they have not ordered Childcare Vouchers during that tax year to ensure they do not lose their full entitlement.