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Understanding Childcare Vouchers

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* Employees are able to make use of childcare vouchers at any registered childminder or nursery in addition to after-school and summer camps for children up to age of 16.
* Vouchers are reimbursed, but they are not able to transfer between companies.
* Both parents who work are entitled to vouchers for childcare.

Childcare vouchers are an extremely popular benefit, and employers have to be aware of the most important information regarding the program, according to Jennifer Paterson

The vouchers for childcare are among the most commonly-used benefits employers can offer their workers and, with the cost of childcare rising, they’re bound to be among the most sought-after benefits.

A thorough communications plan that explains the specific ways vouchers can be used is essential and Employee Benefits has found solutions to some of the employees frequently asked questions regarding childcare vouchers that employers can incorporate into their plans.

1. Which are tax benefits?

Childcare vouchers are exempt from taxes on income and National Insurance (NI) for a maximum of PS243 monthly for basic rate taxpayers. PS124 per month to higher-rate taxpayers , and PS97 per month for additional rate taxpayers.
Julian Foster, managing director at Computershare Voucher Services and a board member of the Childcare Voucher Providers Association (CVPA) and says: “Basic-rate taxpayers can save approximately PS943 per year by purchasing 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 NNI contributions on all vouchers purchased. For taxpayers with a basic rate that means savings of PS400 an year for each employee. If 100 workers are employed, that’s PS40,000 savings.”

Savings on taxes can be derived through an incentive program for childcare to employees as part of the salary sacrifice plan.

2. What are the best places to spend vouchers? used?

Childcare vouchers are available to pay for all nursery or nanny, or childminder registered with Ofsted The official body for examining schools in England and its equivalent 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 grasp of Ofsted registration and the ranking.”

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 childminder’s provider to confirm that they are registered with their childminder.”

Vouchers can also be collected according to McMath. “Childcare vouchers are a great way to use them to cover school holidays, so even if the staff isn’t taking advantage of all the vouchers each week, they could be stored up.” Many people think that childcare vouchers only cover infants and very young children however, they can be utilized for children of a certain age from the 1st of September following the child’s 15th birthday, or a 16th birthday in the case that the child has a disability.

3. What is the minimum age for vouchers?

“People realize that they can use it to provide nannies and nurseries However, what they may not realize is that it could be used for breakfast, after school and summer holiday camps or even 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 that is not during school hours can be paid for with vouchers.”

However, approximately 90 percent of vouchers are used for children under five. Busy Bees’ Woodward says: “It has been a natural progression. Employees who use vouchers for children who are under five know that, so as their children grow older, their knowledge is passed on. The people who aren’t benefiting include parents with 10 and 12-year-olds who did not use vouchers while their children were at the nursery.”

4. Are vouchers resalable and do they expire? they returnable?

In general, there is no expiration date 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 receiving pay, a reimbursement of any voucher would need be made to their employer, and then through payroll. Employers generally allow this but not all. Some plans are structured in a way that after you’ve made the decision 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, he adds that “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. Parents can each take advantage of childcare vouchers?

A lot of people think that vouchers are just for 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, instead to employees.”

More than 400,000 employees use vouchers for childcare each year, and employers must to be prepared to respond to any questions that employees have about the scheme at the time they occur.

A case study Sellafield enhances communications about vouchers for childcare

Nuclear reprocessing plant Sellafield has provided their 9,500 UK employees with childcare vouchers for many years. However, it is constantly updating its communication to ensure that the worth of the offer is understood.

The most frequently asked questions by employees include: Where can vouchers go? What kind of childcare services are included? How much savings can employees achieve based on their earnings? Can both parents receive vouchers?

Joanne Meloy, compensation and benefits advisor at Sellafield She states: “We have a real top of female employees that are taking advantage of vouchers, so we are focusing on fathers.

“We have many 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 could benefit from the benefits.”

The Sellafield childcare vouchers are included in the benefits section of its HR intranet website and includes hyperlinks to the company’s provider, Computershare Voucher Services.

The perk is also advertised 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 firm’s maternity policies 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 employees’ understanding of the childcare voucher scheme.

The campaign, which was created by Vinci’s service provider, Computershare Voucher Services, included roadshows about benefits as well as posters, online slides and other materials in its paternity and maternity leave packages.

The campaign content highlighted the wide range of childcare options for which vouchers are able to be used.

Gemma Concannon, benefits manager at Vinci UK, says: “People are prone to a belief that vouchers are only for nursery schools. They are available for any kind of childcare services, including after-school clubs and we wanted to get the message out.”

In the first couple of weeks following the communication campaign, employer voucher use increased by 7%.

Concannon states: “The vouchers are a means for people to boost the amount they earn at home. It’s a very sensible idea to take.”

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