Make the most of Childcare Vouchers
Paying for childcare using Childcare Vouchers is a great way for parents to potentially save thousands of pounds a year in tax.
A system that is scheduled to be phased out in 2017, there’s certainly an argument as an employer to buy into this opportunity ‘while stocks last’. A cost saving employee benefit, Childcare Vouchers are processed through your payroll services and won’t only save your employees money, they’ll save you money too.
A form of salary sacrifice, any income that parents choose to give up in favour of Childcare Vouchers not only saves your employee tax and National Insurance on the amount exchanged, but this amount also becomes free of Employer’s National Insurance Contributions too. This means that Childcare Vouchers truly are win, win all round.
And there’s more. A great way to reach out to employees, Childcare Vouchers go a whole lot further than just saving money. They are hailed by many as a great way of retaining staff, reducing absenteeism and increasing productivity as well as improving moral and motivation amongst other benefits. So if you haven’t considered them already, maybe now is the time to give them some serious thought.
Providing Childcare Vouchers is a simple, hassle free procedure from an employer’s point of view and is a great opportunity for employees to organise their childcare funding more effectively. In fact, in certain cases, staff who choose to join a scheme part way through the tax year may be able to backdate vouchers for the period when they haven’t used in order to make up their full annual allowance. With up to £1866 of savings per year up for grabs for basic rate tax payers, it’s easy to see why these vouchers are getting so much attention.
Available to working parents and suitable for use to fund all sorts of registered childcare from nurseries to after school clubs, they are a great way to make the right childcare more accessible to parents. And with the right to exchange up to £243 per parent per month, the monthly savings clock up rapidly. For an outlay of just short of £6000 per annum, parents would enjoy full savings from this scheme – making a real difference to their cost of living.
With around 500,000 parents already reported to be part of the scheme, this certainly is something that’s worth thinking about while the opportunity is still open to you as an employer. Promoting the idea of Childcare Vouchers is easy and won’t take much time or effort. And what’s more, if you have a significant number of employees who are parents, you might be surprised at the return on investment you get.
When it comes to running the scheme, you can either choose to run the scheme yourself or you can use a voucher company who will do all the administration for you. Even if you don’t operate the scheme yourself, the small commission you’ll have to pay should still represent a lower cost than the savings you stand to make on National Insurance Contributions.
Finally, a very small word of warning. Because tax credits are based on the amount that is paid in cash for childcare, any parent who is in receipt of tax credits should check the effect that Childcare Vouchers may have on the amount they receive before signing up for the scheme.
If you’re interested in finding out more or if you’d like help to set up a Childcare Voucher scheme, why not get in touch?