Childcare Voucher Scheme is coming to an end
The scheme, in which companies can provide up to £55 per week of employee wages as vouchers to assist with childcare costs, is due to close on 4th October 2018.
The scheme currently operates as an initiative that companies can introduce at their discretion. It works by taking a small sum from an employee’s wage and providing it in voucher form, free from tax and National Insurance contributions. It, therefore, offers monetary aid to assist employees with childcare costs.
From October 4th, the voucher scheme is to be replaced by government backed Tax-Free Childcare. This new initiative offers parents the chance to claim tax-free payments directly from the government of up to £2,000 per annum. It is open to all employees and requires parents to open an online account on the HMRC website, into which they deposit money and the government will top up this amount, up to £2,000 per child each year. Employers, therefore, have no involvement in the new scheme.
If a company is currently running the old scheme they will be able to continue to provide childcare vouchers to employees who joined the scheme before the closure date. However, if an employee who has been on the voucher scheme decides they wish to switch to Tax-Free Childcare, they will no longer be entitled to receive childcare vouchers and must inform their employer accordingly. The decision as to whether to stick with childcare vouchers, or move to the new scheme will depend on each employee’s individual circumstances and the CIPD is advising businesses to be ready to answer any questions that employee may have in relation to this.
Click here to return to PBS HR Newsletter – October 2018