Employers regularly offer the childcare voucher scheme as a way of supporting parents within their organisation. The tax-free scheme has long been popular with working parents, allowing eligible individuals to earn up to £55 per week in childcare vouchers by way of salary sacrifice. However, given the forthcoming changes, there are some things your client should consider.
Your client may continue offering the current scheme to eligible staff, however, it will only be available to those who sign up before October 4th, 2018. From this date onwards, any new applicants will only be eligible for the government led programme which requires no involvement on your client’s behalf. This new scheme instead asks individuals to deposit funds into an account on the HMRC website, and the government will also contribute up to £2,000 per child per year.
Alternatively, your client may take this opportunity to cease their involvement in the employer-led voucher scheme altogether, as this is totally voluntary, in an effort to make things more equal for all staff. However, they should consider how this will be received by those who currently benefit from it, particularly if this forms part of an attractive benefits package.
Whichever way your client decides to proceed, it is important that they inform their employees appropriately, using a combination of emails, promotional posters, and informal meetings. If your client plans to continue offering the scheme they should encourage interested staff to apply as soon as possible, as they must have received the first set of vouchers prior to the cut-off date if they are to be able to use the scheme.
Your client should amend any existing policy on childcare vouchers to make staff aware of the new options available to them. Human Resources and payroll departments will also need to work in unison to ensure only those eligible for the employer-led scheme receive the relevant salary deductions going forwards. Line managers must also be educated on the available options, allowing them to deal with disgruntled staff who may feel that they are missing out as a result of the new scheme.
Some commentators have suggested that the government led scheme could lead to some parents losing out on funds that would have been available to them under the employer-led scheme. If your client is concerned about this they may consider other efforts to support working parents in their organisation, such as partnering with a local daycare center to see if an arrangement can be made to offer staff discounted rates for childcare. However, they are under no obligation to do so.
Ultimately your client can decide whether to continue providing childcare vouchers to those who sign up before October’s deadline. If they wish to change their approach, then they must ensure staff is informed in good time and those workplace policies are amended accordingly.
Please feel free to share this article with your clients