Under the Government’s original plans, there was to be a 5th April 2018 cut off in respect of new entrants to employer-provided childcare vouchers (CCVs).
This was pushed back for six months to 5th October 2018 because of problems with the new Tax-Free Childcare website.
The Government have not announced any further extension beyond this, so employers should now be preparing for the scheme’s closure this October. In doing so you should be communicating with your employees who may want to prepare for the closure by making selections during August election windows.
Helping Pay For Child Care - What You Need To Know1
The following benefits are currently available:
- Families in England, who are receiving some forms of support, with 2 year old children:
15 hours of free childcare or early education a week
- All families in England with 3 or 4 year old children:
15 hours of free child care or early education a week
- Working families in England with 3 or 4 year old children:
30 hours of free childcare or early education a week
a total of 1,140 hours per year, that you can use flexibly with one or more childcare provider.
- Working families in the UK, including the self employed, with children under 12 (or under 17, if disabled):
For every £8 you pay in, the government will add an extra £2, up to £2,000 per child per year i.e. up to £500 every three months
- For working families in the UK, with children under 16 (or under 17, if disabled):
Tax credits on 70% of childcare costs, up to a cap
- For working families claiming Universal Credit, in England, Scotland and Wales with children under 16:
85% of eligible childcare costs, up to a cap
For working families in the UK with children under 16 (or under 17 if disabled):
Up to £933 a year in tax and National Insurance savings if your employer offers childcare vouchers or arranges your childcare.
The amount an employee can receive in childcare vouchers depends on how much they earn and when they joined the scheme. They pay for their childcare before tax and National Insurance deductions are made.
They cannot use childcare vouchers at the same time as Tax-Free Childcare. Over time, Tax-Free Childcare will replace childcare vouchers and childcare arranged directly by you, their employer.
Childcare vouchers will remain open to new joiners until October 2018, with the last election window being in August 2018 (Please note that vouchers have to be received and paid for before the 5th October deadline).
Parents in your employment already using childcare vouchers can continue to do so after this date, as long as you continue to offer them. The tax and National Insurance exemption for workplace nurseries will also continue.
If you offer your employees an Employer Sponsored CCV scheme (ESC), your immediate focus should be to ensure that the benefit does not show for those employees who are not in the benefit after the August election window.
All parties, especially working parents, need absolute clarity on whether there will be any further extension to the childcare voucher scheme. However, the reports to date do not offer us confidence that this will be the case. So, JLT will continue to monitor the situation very closely with our network of benefit providers who are part of the Childcare Voucher Provider Association (CVPA). If there are any further proposed extensions, we will provide an additional update.
We hope you find this article of interest. For further information, or to discuss the impact of the changes on your employees, contact your usual JLT Consultant or Lee Thompson (email@example.com).