Child Care Vouchers Rule Changes

Changes to Trust childcare voucher schemes will take place in the spring.

The Trust currently offers a childcare voucher scheme through Sodexo and due to government rule changes, this scheme will be closed to new joiners from 6th April, 2018.

Sodexo recommend joining by 1st March to enable scheme membership to be established in time.   

The Trust’s childcare vouchers scheme sees the costs for child care vouchers deducted from pre-tax salary, providing the employee with a tax and national insurance benefit. These are deducted prior to pension contributions and also reduce these contributions.

Owing to the tax benefit provided by this, HMRC has set limits on how much money can be converted into child care vouchers, limited by tax paying band to the following annual amounts: £2,915 for basic rate (saving approximately £932), £1,484 for higher rate (saving approximately £623).  Details of the Trust’s scheme:  http://east24/Support-services/HR/childcare-vouchers.htm

Employees can continue to receive vouchers if they’ve joined the scheme and get their first voucher by 5th April, as long as they stay with the Trust and the Trust continues to run the scheme and they don’t take an unpaid career break of longer than a year.

The government has launched a new scheme called Tax-Free Childcare (TFC) which can be opted into, and which will be the only scheme available with tax benefits after 6th April. People can not be in both TFC and the Trust’s (Sodexo voucher) scheme.

 

As stated on NHS Employers website:

TFC is being rolled out gradually during 2017, with parents of children under two years old invited to enter the scheme from 28 April 2017.

Parents can apply for accounts for all their children once their youngest child becomes eligible.

TFC is administered through online accounts, opened by parents on the gov.uk website. Parents pay money into the account, which is used to pay for childcare with registered providers. Other family members and employers can pay into the accounts, however, no details about how employers can do this has been released.

For every £8 a parent pays in, the government will add £2, up to a maximum of £2,000 government support per child, per year (£4,000 for children with disabilities).

The scheme is open to parents of children up to and including the age of 11 (16 for children with disabilities). This is lower than current Employee-supported Childcare schemes which are available for children up to 15 years of age.

There is no mandated role for employers under TFC.

What is not stated on the NHS employer website is that money can be taken out of the TFC scheme, however, the government contribution will be lost.

 

Options:

If you are not in the Trust (Sodexo vouchers) Scheme and have child care needs, please determine which scheme would be better for you, if you wish to be in a scheme and meet the eligibility criteria. The April 2018 deadline for new entrants to the existing Trust (Sodexo vouchers) scheme is a hard deadline not expected to be relaxed by HMRC. The government have established a website tool into which anonymous personal information can be input to calculate the relative benefits of schemes: https://www.gov.uk/childcare-vouchers-better-off-calculator.    

If you are not in the Trust (Sodexo vouchers) Scheme:

  1. Apply for the Trust scheme in sufficient time to receive your first voucher by 5 April 2018, or miss out on eligibility for this scheme. Sodexo customer services state joining by 1 March should enable this to be set up in time. The scheme rules and application processes can be found at http://east24/Support-services/HR/childcare-vouchers.htm.
  2. Register for TFC. https://www.gov.uk/help-with-childcare-costs/tax-free-childcare.
  3. Do nothing.  If registering for no scheme then childcare costs are paid for with no relief for taxation provided by these schemes.  

 

If you are already in the Trust Scheme, options stated by Sodexo:

  1. Remain in the Childcare Voucher Scheme:
  2. Switch to TFC
  • If you have not received vouchers in the last 12 months, HMRC will class you as a leaver from the scheme and you will need to re-join and have a salary deduction before April 2018.
  • If you are not currently receiving vouchers but you have been in the Childcare Voucher Scheme within the last 12 months, you can re-join provided you didn’t join TFC and you re-join the voucher scheme before there has been a 12 month break.
  • You should be aware that if you choose to switch to Tax-Free Childcare, you will not be able to switch back to the Childcare Voucher Scheme at a later date.  
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