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* Employees are eligible to make use of childcare vouchers at any registered childminder or nursery in addition to summer and after-school clubs for children who are up to the age of 16.
* Vouchers are reimbursed, but they are not able to be exchanged between different employers.
* Both parents who work are entitled to vouchers for childcare.
Childcare vouchers are a very popular incentive, and so employers need to be aware of the most important information regarding the program, according to Jennifer Paterson
Childcare vouchers are among the most commonly-used benefits employers can offer their workers and, as childcare costs are increasing, they’re likely to be among the most sought-after benefits.
A complete strategy for communicating the specific ways vouchers can be used is essential for employees, which is why Employee Benefits has uncovered solutions to some of the employees the most frequently-asked concerns about childcare vouchers, for employers to incorporate into their plans.
1. Are there tax benefits?
Childcare vouchers are exempt from the tax on earnings and also national insurance (NI) for a maximum of PS243 per month for basic rate taxpayers. PS124 each month, for higher-rate taxpayers , and PS97 each month for additional-rate taxpayers.
Julian Foster, managing director at Computershare Voucher Services and a board member of the Childcare Voucher Providers Association (CVPA) said: “Basic-rate taxpayers can save approximately PS943 annually by using vouchers for childcare.”
Additionally, there are tax benefits for employers. Dally Purewal, product and quality manager at Co-operative Employee Benefits, says: “Employers make savings on contributions to NI on all vouchers that are purchased. For taxpayers with a basic rate it would mean savings of PS400 annually per employee. In the case of 100 people, that’s PS40,000 of savings.”
Savings on taxes can be derived by providing an incentive program for childcare to employees as part of an arrangement for salary sacrifice.
2. What are the best places to spend vouchers? used?
Childcare vouchers are available to pay for all nursery or nanny, or childminder who is registered with Ofsted The official body for examining schools in England and its counterparts to the equivalent in Northern Ireland, Scotland and Wales.
John Woodward, group chief executive of Busy Bees Employee Benefits, states: “Most parents have a decent knowledge of Ofsted enrollment and the grades.”
Iain McMath, managing director at Sodexo Motivation Solutions, says: “We have more than 35,000 registered childminders registered on our system. If parents are unsure they should contact their provider to make sure that they are registered with their childminder.”
The vouchers can also be used to accumulate according to McMath. “Childcare vouchers are a great way to use them during school holidays, which means even if your staff aren’t taking advantage of all the vouchers each week, they could be stored up.” Most people believe that childcare vouchers are only for infants and very young children However, they can be utilized for children of a certain age from 1 September , following the 15th birthday of a child or a 16th birthday in the case that the child has a disability.
3. What is the minimum threshold for vouchers?
“People are aware that they can utilize it for nurseries and nannies however what they might not be aware of is that it could be used for breakfast, after school and summer holiday camps or activity camps” Computershare’s Foster. “It is also a great option as a backup or emergency childcare option.”
Laura Czapiewski, product manager childcare vouchers from Edenred Laura Czapiewski, Edenred’s product manager for childcare vouchers, states “Any child care provided in a school during non-school hours is eligible for payment using vouchers.”
However, approximately 90 percent of vouchers are utilized for children under five. Busy Bees’ Woodward says: “It has been a natural process. Employees who use vouchers for their children under five understand the concept, and as their children get older, their knowledge is passed on. The people who aren’t benefiting include parents with 10 and 12-year-olds that didn’t make use of vouchers while their children were at the nursery.”
4. Do vouchers expire , and are they returnable?
Typically, there isn’t an time limit for childcare vouchers. Employers are able to decide on whether to reimburse the remainder of vouchers that have not been used. Foster states: “Generally, since employees receive vouchers rather than being paid, any return of vouchers would need to be refunded through their employer as well as through payroll. Employers generally allow this however, not all. Certain schemes are designed so that once you’ve decided to reduce your the salary, it’s done.”
HM Revenue and Customs says vouchers can be refunded only in certain circumstances. Czapiewski suggests it is best practice to not offer refunds as a regular element of the program, however, she adds “It is ultimately the decision of the employer.”
An employer is required to pay any balance remaining in the account of a voucher for an employee who leaves the organization since it isn’t transferred between employers.
5. Are both parents able to take childcare vouchers?
A lot of people think that vouchers are only available to one parent who is working, but fathers and mothers can benefit from childcare benefits in the time they’re working.
Sodexo’s McMath states: “There is still a large assumption that it is only accessible to mothers. It’s not related towards the infant, however, rather to an employee.”
Around 400,000 workers use vouchers for childcare each year, which means that employers have to be prepared to respond to questions from employees about the scheme at the time they occur.
A case study Sellafield boosts communication regarding vouchers for childcare
Nuclear reprocessing plant Sellafield has provided the 9,500 UK employees with childcare vouchers for many years. However, it has been updating its messages to ensure that the benefits is understood.
Questions frequently asked by employees include: Where can vouchers go? What type of childcare is provided? What savings can staff achieve based on their earnings? Do both parents have the right to vouchers?
Joanne Meloy, compensation and benefits advisor at Sellafield She states: “We have a real high percentage of female employees who use vouchers, and we are focusing on fathers.
“We have lots of parents who are from the same family as us because we are the largest employer in West Cumbria.
“Communication involves making them aware that both parents will benefit from the benefits.”
The Sellafield’s childcare voucher communication is included in the benefits section of its intranet HR site as well as hyperlinks to the company’s provider, Computershare Voucher Services.
The benefits are also made known to employees via the childcare voucher roadshows as well as booklets and flyers and also on posters placed on the Sellafield’s noticeboards at work. The perk is also promoted in the company’s maternity guidelines and the family benefits booklet.
Case study: Vinci builds childcare voucher take-up
Construction company Vinci UK launched a communications campaign at the beginning of the year to update its 4,000 employees’ understanding of its childcare voucher program.
The campaign, developed with Vinci’s service provider, Computershare Voucher Services, included roadshows about benefits as well as posters, slides online and other materials in its paternity and maternity leave packages.
The campaign content highlighted the wide range of childcare options for which vouchers can be utilized.
Gemma Concannon, benefits manager at Vinci UK, says: “People tend to have the belief that vouchers are only for nursery schools. They are able to be used to fund a variety of childcare services, including after-school clubs and we were keen to get the word out.”
In the first two weeks after the communication campaign, vouchers for employers’ use increased by 7%.
Concannon states: “The vouchers are a means for people to boost their earnings at home. It’s a very smart thing to do.”
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