Childcare Vouchers – are you ready for the deadline?

Childcare Vouchers – are you ready for the deadline?

online employee benefits provider childcare vouchers pesThe April 2018 deadline for signing up to receive childcare vouchers will be upon us sooner than you think. When it’s passed, parents will have no choice but to use the Government’s tax-free childcare scheme. So now is the time to explain to your employees the advantages of using childcare vouchers.

If you don’t already offer a childcare voucher scheme, perhaps it’s also a good time to consider whether you should. Why? Here are some key reasons.

The childcare voucher scheme will NOT cease to exist from April 2018. Some employees may be reluctant to sign up because they think it’s ending. Not so. The childcare voucher scheme will be closed to new entrants from April 2018, but if employees are already signed up, they can continue to receive vouchers for as long as they stay with the same employer.

Childcare vouchers may well offer your employees greater flexibility and greater savings than the Government’s scheme. This makes them a valuable benefit that boosts loyalty and engagement. They are also likely to support a wider employee demographic and appeal to more of your employees. Read on to find out more.

Childcare vouchers offer savings on National Insurance Contributions (NICs) for both employers and employees.

For example, if 10% of the workforce sign up for childcare vouchers, the table below gives an indicative saving in NICs for the employer:

Number of employees 70
Average salary £20,000
Employer NIC saving on childcare vouchers £2,763

Childcare vouchers are not just for pre-school-age children. They can be used for children up to the age of 15 (or 16 if the child is disabled). The Government’s tax-free childcare scheme can only be used for children up to the age of 12 (or 17 if the child is disabled).

Only one parent needs to be in work to apply for childcare vouchers. With the Government’s scheme, both parents need to be working to be eligible.

A childcare voucher scheme can be set up quickly and cost-effectively, in time for the April 2018 deadline.

What else do your employees need to know?

Employees will need to sign up by April 2018 if they want to benefit from the childcare voucher scheme.

Employees must make a minimal contribution to enter a childcare voucher scheme. Even if they only submit £1, there must be a balance on the account so they can be enrolled.

They must be parents already to be eligible for childcare vouchers. Expectant parents will not be able to apply for the scheme until their child is born. If this is post-April, they won’t be able to receive childcare vouchers.

They will only be able to stay in the scheme as long as they remain with you as their employer. If they change jobs, they will need to switch to the Government’s tax-free childcare scheme, even if their new employer still offers childcare vouchers to existing staff who signed up before the April 2018 deadline.

If in doubt, parents should join the childcare voucher scheme now. They cannot be in both the tax-free childcare and childcare voucher schemes at the same time. They may change their mind and opt out of receiving childcare vouchers at a later date, but they cannot opt in after April 2018.

The important thing to remember is that the Government’s tax-free childcare scheme won’t necessarily be the right choice for all families. At least having childcare vouchers now will allow employees to choose what works best for them in the future.

At PES, we take the headache out of setting up and administering childcare vouchers. Even if this is the only employee benefit you offer, we provide a cost-effective, online solution that makes life easy for both you and your employees.

Contact us to find out how we could help you with childcare vouchers.

M+W Group chose PES as their online employee benefits provider and also save £100,000 in insurance renewal fees!

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About PES

Employee Benefits Provider PES offer Online Employee Benefits, HR Support and Workplace Wellbeing, pensions advice and health, group risk insurance products.