The Future of Childcare VouchersPosted in : Supplementary Articles NI on 22 January 2018
Chris Briggs, Senior Family Benefits Advisor at Employers For Childcare discusses all things Childcare Voucher related. In this interview with Claire Marley, L&D Services Officer at Legal-Island, Chris answers questions including:
- What is replacing the Childcare Voucher Scheme?
- What do I have to do to offer my employees the new scheme?
- Can I continue to offer the Childcare Voucher Scheme after April 2018?
- What if I have staff who are currently on maternity / paternity / shared parental leave and are not due back to work until after April 2018?
- I will have some staff who are able to access the scheme, and some who will be unable to access the scheme, is there a risk of perceived discrimination and will I need to change any procedures?
- Will I continue to make the employer savings?
Following this webinar, Chris Briggs answered any unanswered questions in a follow-up Q&A. It's available here.
The webinar slides are available to download here:
Claire: Hello, and welcome to "The Future of Childcare Vouchers" webinar. My name is Claire Marley, Learning and Development Services Officer at Legal-Island, and today I'm joined by Chris Briggs, Senior Family Benefits Advisor at Employers for Childcare.
Good morning, Chris.
Claire: In this morning's webinar, Chris will explain the financial support mechanisms available with registered childcare costs, the changes to the Childcare Voucher scheme, and what employers should do now. Chris will answer a number of questions, and, also, please feel free to send in your questions via the chat box on your screen.
What is Employers for Childcare?
So, firstly, Chris, could you tell us a little bit about Employers for Childcare, and what it does?
Chris: Yeah. You may know Employers for Childcare for Childcare Vouchers, but we actually encompass an independent charity, as well as a Social Enterprise Childcare Voucher company. Our charity works to address childcare, not only as a social issue, but also as a labour market and economic issue. We help parents maximize their incomes, manage childcare costs to aid them in making work pay, and create a suitable work-life balance. We do this through our Family Benefits Advice Service, which is also a source of information and guidance for employers.
Why is it the time to learn about Childcare Vouchers?
Claire: And so, Chris, why is the time right to learn more about the future of childcare vouchers?
Chris: The childcare vouchers scheme is currently due to close to new entrants from April 2018. We have been lobbying government for childcare vouchers to be kept open to new entrants so that new parents, or those who change jobs, or whose circumstances change can have the option of benefiting from the scheme. This is critical as 66% of callers to our Family Benefits Advice Service are better off on Childcare Vouchers or tax credits rather than Tax-Free Childcare.
A petition calling on the government to keep childcare vouchers open to new entrants has received over 116,000 signatures from across the UK. As a result of this petition, a parliamentary debate was scheduled to discuss the future of Childcare Vouchers. The debate took place last Monday, and provided an opportunity for MPs to put concerns to government. There is an update article on our website. Strong arguments were put across to keep Childcare Vouchers open alongside Tax-Free Childcare. We are still waiting to see whether the government will make a decision to keep Childcare Vouchers open to new entrants, and we'll be using our website and social media to keep you informed.
The Treasury Committee has also announced an inquiry into childcare policy and its impact on employment opportunities for parents. There's also an early-day motion calling for childcare vouchers to be kept open alongside tax-free childcare. We're asking anyone who's keen to see this form of support remain open to new entrants to write to their MP and ask them to sign the motion. You'll find details of how to do this on our website, where we have posted an article on the parliamentary debate.
In the meantime, working parents who wish to join Childcare Voucher scheme need to do so as soon as possible, and parents can do this by making a salary sacrifice from their pay prior to the closure date.
What other financial support mechanisms are available to working parents?
Claire: And, Chris, could you provide us with a brief introduction to the other financial support options available with the cost of childcare?
Chris: Yeah. Briefly, there's currently four forms of assistance with registered childcare costs, namely tax credits, universal credit, the Childcare Voucher scheme, and Tax-Free Childcare. The best form of assistance will depend on the individual's specific set of household circumstances at any given time. The focus will be on Childcare Vouchers today, as this is the scheme which requires involvement of employers, and the opportunity for interaction between employer and employee. But we will also introduce the newer scheme, Tax-Free Childcare.
Claire: That's great. And so it's really each individual family’s circumstances; it's really tailored support in terms of their individual circumstances that is best?
Chris: Yes. That's correct.
Claire: And you advise families or parents to get in touch with yourselves to decide as to which avenue is best for them?
Chris: Yep, we would.
Is the Childcare Voucher scheme closing completely?
Claire: Great. And so is the Childcare Vouchers scheme closing completely in April 2018?
Chris: No. The Childcare Vouchers scheme is being restricted to those who are already in the scheme at that date. At present, government policy is that there can be no new entrants after April 2018. We're currently lobbying for the Childcare Vouchers scheme to be kept open to new entrants. However, if it does close to new entrants, it's vital that employers are aware of this, and can ensure that their staff are in a position to make an informed choice so that their family is better off.
It's important to remember that if you have staff who were previously members of the scheme, but who opted out temporarily, they can only remain in the scheme if they make at least one salary sacrifice within each 52-week period. We would strongly recommend that all parents take advice if they're considering leaving Childcare Vouchers to join Tax-Free Childcare, as they may not be able to re-join the scheme, and could find that they're worse off.
Employers have told us that they're receiving questions from staff about what form of support is best for them, and this is a question that Employers For Childcare, through the Family Benefits Advice Service, will be glad to answer for you, and we're happy for you to direct your staff to us.
Can employers still offer the Childcare Voucher scheme after the deadline?
Claire: And can I continue to offer the Childcare Vouchers scheme after April 2018?
Chris: Yes, to all staff who have been in the scheme prior to this date, as long as they have not been out of the scheme for more than 52 weeks. Employees will continue to make savings through their tax and National Insurance contributions as long as they have registered childcare costs and remain in the Childcare Vouchers scheme, which is potentially until your youngest eligible child reaches the age of 15, or 16 if the child has a disability.
Claire: And so, how long would they be able to make those savings for, Chris?
Chris: Well, employers can continue to make the savings on their employer's National Insurance contributions. The amount of savings will depend on the amount sacrificed by the employees. The government has not indicated that they're planning to make any change to this. So, while an employer still has employees using the Childcare Vouchers scheme, the savings will continue, and that is potentially until the employee's youngest eligible child reaches the age of 15, or 16 if the child has a disability.
Claire: If our company does not yet offer the Childcare Vouchers scheme, is there still time to set one up?
Chris: Yes. If you don't have a scheme already in place, there's still time to set one up. You will need to take action now. However, to make sure that you have the scheme in place, and can offer the salary sacrifice to employees ahead of their April cut-off point, if the scheme does close to new entrants in April, then staff who have had salary sacrificed in their March pay, at the very latest, will be deemed to have joined the scheme. Otherwise, you, as the employer, and your staff will not be able to access the benefits of the Childcare Vouchers.
Claire: So that salary sacrifice is really quite important in terms of acting now, as well. You really need to take action in terms of benefiting from the scheme. Is that right?
Chris: Yes. That's correct.
What if an employee is on maternity/paternity/shared parental leave and is not due back to work until after April 2018?
Claire: Great. And so, what if an employer has staff who are currently on maternity or paternity leave, or shared parental leave, and are not due back to work until after April 2018? What's the position there?
Chris: A parent can join the Childcare Vouchers scheme from whenever their child is born. So employees, however, cannot salary-sacrifice below the equivalent of the national living or minimum wage. If you have staff who are on Occupational Maternity Pay, who are earning more than Statutory Maternity Pay, they are able to join. Key thing is that an employee who is only in receipt of Statutory Maternity Pay is unable to join the scheme. So, if you have a member of staff who is being paid, for example, for a KIT day, or where they are being paid part of their salary on top of Statutory Maternity Pay, they are able to sacrifice even as little as £1, to join the scheme and give themselves options, moving forward.
Some employees can access the scheme, some cannot. Is there a risk of perceived discrimination?
Claire: And if employers have some staff who are able to access the scheme, Chris, and some who are unable to access the scheme, is there a risk of perceived discrimination, and will they need to change any policies or procedures within their organization?
Chris: As it is the government who has decided to make the change of the Childcare Vouchers scheme, you, as the employer, should not be at risk of any perceived discrimination as long as those who are still eligible to join the scheme are allowed to. You may need to make changes to your staff handbooks or contracts of employment to reflect this change in government legislation.
After April 2018, the only parents who will be able to access the scheme are those who are already in it, or those who have been in the scheme in the previous 52 weeks, and wish to re-join, and have not joined the Tax-Free Childcare scheme. You may need to put a procedure in place to check this aspect of joining the scheme. Employees who were previously in the scheme, but who have not made a Childcare Vouchers sacrifice in the previous 52 weeks at the point they wish to re-join, are no longer eligible for the scheme.
Which scheme is best?
Claire: So that 52-week window is really coming back into play here. And so, is the Childcare Vouchers scheme . . . it's obviously better for employers, but which scheme would be better for employees, and how do the two schemes compare?
Chris: Which is the best scheme will be dependent on a range of factors that would be unique to each household, including their childcare costs, the parents' income, the number of children that they have, ages of the children, and if there are any disabilities affecting the children, or indeed the working adults in the household. Of the callers to our Freephone Helpline, approximately 34% are better off on Tax-Free Childcare. That leaves 66% who are better off on Childcare Vouchers, tax credits, or universal credit, or a combination of those. Childcare Vouchers can be accessed alongside tax credits and universal credit, which is unlike Tax-Free Childcare which is a standalone benefit.
Employers for Childcare's Family Benefits Advice Service can give comprehensive advice and information regarding what is the best form of support for your employees. This advice and information is not restricted just to Tax-Free Childcare and Childcare Vouchers, but this also covers Tax Credits and Universal Credit. The Family Benefits Advice Service aims to provide parents with the best, most accurate information based on their circumstances as described by the parents whenever they are talking to the Benefits adviser.
Claire: And so, parents would really need to get in touch to sort of determine which option would be best for their family circumstances?
Claire: And where could they find out more information about this?
Chris: Parents and employers can speak to one of our advisors on our Freephone Helpline, which is 0800 028 3008. The facility is there both for your staff and as an employer, and also for the employees, as well. A good first step is to arrange a free telephone consultation with one of our advisers, and that can be from an employer's perspective, and, secondly, to ensure that all your staff have the Freephone Helpline number, whether they use Childcare Vouchers or not. Last year, working parents who received a personal benefits cheque from our team gained, on average, over £4,000. However, obviously, every family circumstances will be different, and it is really only by speaking to one of our advisers that a parent can be sure that they are accessing the best form of support that is available to them.
Claire: And, Chris, is there anything else we should be doing in the run-up to the deadline when Childcare Vouchers is due to close to new entrants?
Chris: Yes. You can tell your staff about these changes. You can advise your staff to contact the Employers for Childcare's Family Benefits Advice Service. It is a free, confidential, and impartial advice, and the number is 0800 028 3008. If there are any staff who are not currently members of the Childcare Vouchers scheme, and are planning to join, they must have made their first salary sacrifice from their pay cheque before April 2018. So, that's probably from their March salary if they're paid monthly, or their February salary if they can get in on a six-weekly cycle. You must ensure that staff who have opted out of the scheme temporarily have made at least one salary sacrifice in the last 52 weeks in order to remain in the scheme.
If you're an employer who has not yet signed up to offer the Childcare Voucher scheme, then you need to take action now to make sure that you have the scheme in place, and can offer salary sacrifice to your employees well ahead of the current date of closure of the scheme to new entrants. Otherwise, it would be too late for you, as the employer, to set up the scheme and allow your employees to access it as well.
If necessary, you may need update contracts of employment, staff handbooks, or your terms and conditions to reflect the closure of the scheme, and this will mean that some staff will be eligible to benefit for the scheme, and others will not. And remember you can arrange a free telephone consultation with one of our advisers from the employer's perspective to make sure that you have all the information that you need, and can support your staff.
Claire: Thank you, Chris. That was very useful advice. We're receiving a lot of questions via our chat box. If you're happy to take a few?
Chris: Yep, sure.
Claire: Are existing members of the Childcare Vouchers scheme better off in the scheme or moving to Tax-Free Childcare? Is there a broad salary range where it is beneficial to be in one scheme or the other?
Chris: As I've already said, whether an employee is better off on Childcare Vouchers or Tax-Free Childcare is more determined by their childcare costs rather than the amount of their salary. Depending how much they can sacrifice through Childcare Vouchers . . . for example, if both parents are able to access the Childcare Vouchers scheme, then the maximum saving that a household can make through Childcare Vouchers is £1,866 per year. So, that is compared to a saving through the Tax-Free Childcare, which is based solely on the childcare costs for the employee. For a household to make more savings through Tax-Free Childcare than they would through the Childcare Vouchers in that scenario, they would need to have childcare costs of more than £9,330 per year for the Tax-Free Childcare savings to be better than the current Childcare Voucher savings that they might be getting.
Another factor is that with the Childcare Vouchers scheme, only one member of the household needs to be in work. So, if the other member of the household is not working for whatever reason, parents can still save through the Childcare Vouchers scheme. However, with the new Tax-Free Childcare scheme, that is not the case, that if there's no disability, or other reason, in the household for not working, then they cannot access help through the Tax-Free Childcare scheme. And it may well be that in that scenario, tax credits or universal credit is a better option, anyway, and so that's why we would always be saying, "Make sure you get advice before moving from your current help that you're getting to any of the other schemes."
Claire: Thank you, Chris. We'll take another one. If an employee is already registered as part of the current Vouchers scheme, but has another child after the Vouchers scheme closure date in April, can the second child continue within the scheme?
Chris: Yes, absolutely. The Childcare Vouchers scheme is based on the parents' situation rather than the child's situation. So, whether you have one child or four children, the maximum amount that you can sacrifice through the Childcare Vouchers scheme is £243, which is savings of £933 a year. And that maximum doesn't matter how many children that you have. It's based on the parents' circumstances.
Claire: And just to recap, Chris, I think we had a few people that joined in late, can an employee join the scheme before the baby is born once it is confirmed someone is pregnant?
Chris: No. You cannot join the Childcare Vouchers scheme unless you actually have a child. So, if you're pregnant, then unfortunately you can't join Childcare Vouchers. You have to have already had the baby.
Claire: Okay, great. And is the parent that joins rather than the child . . . for example, if a parent has a new child in May and they have joined with an older child, can the newer child still be part of the scheme?
Chris: Yes, yes, they can.
Claire: And if an employee currently is in the Childcare Voucher scheme but moves to another employer after April 2018, do they retain the right to remain within the current scheme?
Chris: Unfortunately, they do not. So, if you move to a new employer, then you're treated as a new joiner to the Childcare Vouchers scheme. Even though you may have been in the Childcare Vouchers scheme for years in the past, you're treated as a new joiner to the scheme. And, therefore, after April 2018, unfortunately, you would lose that access to the Childcare Vouchers scheme and would have to move to Tax-Free Childcare, or tax credits, or universal credit, if one of those were relevant to you.
Claire: And so, Chris, I'm sure there's a lot of employers that are wondering, as well, in terms of cost administering the Childcare Vouchers scheme. Could you tell us a little bit about that?
Chris: Yes. Because I'm answering as part of the charity, then we can take questions on that, but we would be asking anybody who has a question on that to contact us directly and we would refer your question across the Business Department of Employers For Childcare, and they would be able to talk you through that. However, from an employer's point of view, there is no cost to the employer because the Childcare Vouchers scheme is a cost-neutral scheme. As it is a saving on tax and National Insurance for an employee, it's also a saving on employer's National Insurance from an employer. So any costs that there are come from the savings through their employer's National Insurance. So it is cost-neutral to employers.
Claire: Okay. And would you have any advice on how employers could communicate these changes to their staff?
Chris: Yes. We have information that we can give to employers. Obviously, we've talked about our Freephone Helpline, which is 0800 028 3008, and you can pass that number on to your employers. And we have, also, communication materials that we can pass on to employers for them to distribute to their employees. We have access on our website to fact sheets, which not only talk about Childcare Vouchers and Tax-Free Childcare, but also a range of other benefits, and help with childcare costs that there are.
On our website, there's also a comprehensive guide to Tax-Free Childcare, which is called "Big Changes, Big Choices." And as part of that guide, there are a number of examples, different scenarios for different households, different earning levels, different numbers of children and childcare costs that people can read and see if they fit in any one of those scenarios, that would guide them as to what might be best for them. And also, phone our Freephone Helpline.
Claire: Thank you, Chris. And we've one more through the chat box. If an employee is in the Childcare Vouchers scheme in April but decides to move to the new scheme in, say, June 2018, can they move back to the old Childcare Vouchers scheme at a future date, or not?
Chris: No. The current rules for the Tax-Free Childcare scheme state that you cannot move back to Childcare Vouchers from Tax-Free Childcare, certainly not after April 2018, as you would be treated as a new joiner to the scheme. So, you can no longer do that.
Claire: Okay. And if a company has two separate entities, i.e. separate tax companies, can an employee move between these without losing, or would they be seen as a new employee in the new entity?
Chris: They would be seen as a new employee to the new entity. As it's treated as two separate employers, they would just be treated as moving across to a new employer.
Claire: No problem. And, is it definitely closing? And would you have any advice on that with this scheme?
Chris: We are certainly lobbying government, and I've already mentioned that we are doing what we can to put pressure in government that the scheme would not close, but that it would remain open alongside Tax-Free Childcare because there are people who will be better off on Tax-Free Childcare, but also others who would be better off remaining in Childcare Vouchers. So, at the moment, the scheme is definitely closing, but we are still putting pressure on government to try to make sure that Childcare Vouchers stay open alongside Tax-Free Childcare.
Claire: And those options remain open to other parents out there?
Claire: Great. No problem. And will Employers for Childcare be issuing a leaflet giving details of the changes for employers to issue to staff?
Chris: As I said, we have information online. There's a lot of information about Tax-Free Childcare because it's quite a complicated scenario whenever you're looking at what is the best thing for households to do, so we would direct employers and employees to our fact sheets that are online, and also our comprehensive guide to Tax-Free Childcare, "Big Changes, Big Choices," which is available on our website.
Claire: Okay. Thank you, Chris. I believe that's all we have time for. Chris's contact details are now on screen. So, if you have any additional queries, please do get in touch with him directly.
We have one additional one before we go. Medical staff move between hospitals on a rotation. Will they be treated a new employee when they move to the new hospital?
Chris: Yes. Unfortunately, they are. Although you may feel like you're just moving to a new bed within the NHS, because you're moving to a different trust, then you're treated as a new joiner to a new scheme whenever you move employers.
Claire: Okay, great. Thank you for clarifying that, Chris. As I said, Chris's contact details are on screen, so please do get in touch with him if you have any additional questions. A copy of the presentation slides, alongside a transcript and podcast of this recording will be emailed to you shortly, and we will also provide a Q&A email shortly following this webinar.
Please don't forget Legal-Island is hosting another live webinar tomorrow on data protection issues and the GDPR, so please do tune in to that. And we also have our regular "Employment Law at 11" live webinar with Seamus McGranaghan of O'Reilly Stewart, which takes place on the first Friday of every month, so please be sure to register for that one on the 2nd of February.
Thank you, and I hope you listen in again soon.
If a company has two separate entities, i.e. separate tax companies, can an employee move between these without losing or would they be seen as new employee in new entity?
If the individual is joining a separate company, unless they are moved under TUPE arrangements, then they will be treated as a new employee and a new joiner to the Childcare Voucher scheme. If the scheme closes to new entrants, they would no longer be eligible to join the Childcare Voucher scheme.
Broadly speaking and subject to individual circumstances, are existing members of a CCV better off in a CCV scheme or moving to Tax-Free Childcare? Is there a broad salary range where it is beneficial to be in one scheme or the other?
This really depends on the parent’s individual circumstances and factors including household income, whether a parent is self-employed, childcare costs, whether there is a disability in the household. We recommend that all parents call Employers for Childcare’s Family Benefits Advice Service on 0800 028 3008 to get free, confidential and impartial advice.
Is it the parent that joins rather than child? For example, if a parent has a new child in May and they have joined with an older child can the new child still be part of the scheme?
The savings through Childcare Vouchers are made to the parent rather than to a child, therefore, provided a parent is in the scheme, they can continue to salary sacrifice for as long as they remain eligible. They can use their Childcare Vouchers to meet the registered childcare costs for each of their children.
With the Tax-Free Childcare scheme, it is the household that joins the scheme based on the eligibility of the parents and child(ren), there is then a Tax-Free Childcare account opened for each eligible child.
Can a staff member (1st time parent) join the scheme & have salary sacrifice deductions BEFORE their baby is born?
No, a parent can only join Childcare Vouchers and salary sacrifice once their child has been born.
If an employee currently in the CCV scheme moves to another employer after April 2018, do they retain the right to remain in the current scheme if they wish?
When a parent switches employer, they are treated as a new joiner to the Childcare Voucher scheme. If the scheme closes to new entrants, they would no longer be eligible to join the Childcare Voucher scheme.
Medical staff move between hospitals on a rotation, will they be treated as a new joiner when the move to the new hospital?
When a parent switches employer, including those who rotate across Health Trusts, they are treated as a new joiner to the Childcare Voucher scheme. If the scheme closes to new entrants, they would no longer be eligible to join the Childcare Voucher scheme.
If an employee is already registered as part of current Childcare Voucher scheme but has another child after the voucher scheme closure date in April can the second child continue within the scheme?
The savings through Childcare Vouchers are made to the parent rather than to a child therefore, provided a parent is in the scheme, they can continue to salary sacrifice for as long as they remain eligible. They can use their Childcare Vouchers to meet the registered childcare costs for each of their children.This article is correct at 22/01/2018
The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.