With effect from 4 October, employees will no longer be able to join any Childcare Voucher scheme you may offer.
However, those who are already enrolled into the scheme will still be able to benefit from it, providing:
· you continue to run the scheme
· they remain in your employment
· they do not take an unpaid break of more than a year
· and their child remains eligible
Is there any impact as an employer? The biggest impact will be the potential loss in employer NIC savings if employees leave your scheme to join Tax-Free Childcare (this could be up to £402 per year, per parent).
What are the differences between Childcare Vouchers and Tax-Free Childcare?
Usually childcare vouchers are provided through a salary sacrifice scheme managed by the company. The voucher value is then made available to the employee through an online account, which they use to request payments to their chosen registered childcare providers.
The scheme applies to children under 16 (or under 17 if disabled).
With this scheme employees can save up to £933/year in tax and NIC, depending on their tax rate. Both parents may participate in the scheme, thus doubling their potential saving up to £1,866.
As an employer you also save up to £402/year in NIC for each employee that joins the scheme (up to13.8% of voucher value).
Tax-Free Childcare is managed by the Government through NS&I (National Savings and Investments). Parents open an online account, pay money in, and use this to pay their registered childcare provider.
The Government ‘tops up’ the amount, so for every £8 paid by the parent, the Government will pay £2 (equivalent of 20%). However, parents must re-confirm their eligibility every three months.
This scheme applies to children under 12 (under 17 if disabled) who usually live with the parent.
As an employer you make no NIC savings under this scheme.
What should I do around childcare? If you already have a scheme in place, reassure your employees that you are going to continue with it.
If not it may now be too late to set up a scheme, as employees’ salary adjustments need to be in place and they need to have received their vouchers by midnight on 4 October 2018.