13 Feb 2018

Why consider childcare vouchers before the cut-off date?

For working parents, childcare is likely one of the biggest outgoings from the household every year. A survey conducted by the Family and Child Care Trust found that many families can spend up to 45% of their disposable income on average childcare costs.

This means that there are significant savings to be made for families who rely on nurseries, childminders and play schemes to help with childcare while they are at work.

What are the benefits of offering affordable childcare?

Affordable childcare programmes such as Childcare Vouchers can help both you and your employees save money. These schemes work by deducting directly from employee salaries, meaning that tax and national insurance savings will be made for both your business and the employee.

Ensuring your employees’ childcare is supported through Childcare Vouchers can also help to boost job performance and retention. According to research from The Family and Child Care Trust, families on average spend twice as much on childcare than they do food and drink. This means that childcare can present extra financial stress for employees, decreasing their focus and increasing their distraction in the workplace.

Helping your employees to feel secure in the knowledge that they are saving money is also beneficial to engagement. Your employees, after saving money on childcare, can be reassured that their childcare is covered, meaning they are less likely to worry about the cost of continuing to use the service. This is likely to boost employee engagement, meaning your workplace will be an overall more productive and happier place to be.

How do Childcare Vouchers work?

Childcare Vouchers can be used for children up to the age of 16 to pay for registered childcare at nurseries, childminders, play schools, pre-schools, nannies and au pairs, crèches, play schemes, before and after school clubs, holiday camps, independent schools and more.

Offering Childcare Vouchers to your staff means that they can exchange a part of their salary (up to £243 per month) for the same amount of Childcare Vouchers, resulting in savings on tax and National Insurance. The scheme is free to set up for employers, with a small service charge to pay once the scheme is set up.

Why should employees sign up to the Childcare Voucher Scheme?

In 2017, the government began rolling out a new system for working parents to access savings on their childcare costs called Tax-Free Childcare (TFC). This scheme will see the government subsidising 20% of a child’s childcare costs on fees of up to £10,000 per year.

Many employees will, however, be better off using the childcare voucher scheme, but the scheme will only be open to new entrants until April 2018. As a result of this, the government has provided a useful calculator enabling employees to see which scheme works best for them. Click here to go to the calculator.

This makes it important for parents to get signed up to the scheme before the cut-off date, so that they are able to make the choice of which scheme to remain on. By ensuring your staff are on the right childcare scheme for them, you can help ensure they are healthy, happy, and more likely to stay within your organisation long-term.

This article was provided by Busy Bees Benefits.