What UK employers need to know about the Tax-Free Childcare scheme
In our previous article we looked at Tax-Free Childcare from the perspective of UK parents (click here to access the article and get rates, qualification and application details); in this article we’ll approach the scheme from the employer’s perspective - Tax Free Childcare and UK Employers, what you need to know.
What UK employers need to know
As mentioned previously, Tax-Free Childcare is a UK government scheme to assist parents with their childcare costs. Companies can make payments into their employee’s childcare account. This can be done on behalf of the employee through the company payroll or supplementary payments can be made by the employer. If supplementary payments are made these are subject to appropriate deductions.
Tax Free Childcare and UK Employers Supported Childcare transition
Tax-Free Childcare will replace Employer-Supported Childcare, i.e. the existing “childcare voucher” scheme. Employer-Supported Childcare will not be available to NEW entrants after April 2018, however, parents can CONTINUE using childcare vouchers after this date if their employer continues to support the scheme.
Employees moving from Employer-Supported Childcare to Tax-Free Childcare
Employees need to provide their employer with a Childcare Account Notice (CAN) when moving from Employer-Supported Childcare to Tax-Free Childcare. A CAN is just written documentation, which can be in the form of an email, that states that the employee wishes to leave the employer’s voucher scheme and use Tax-Free Childcare. The employee has 90 days after opening a Tax-Free Childcare account to provide a CAN to their employer. Once you, the employer, have their CAN, you must terminate the employee’s access to Employer-Supported Childcare.
Assistance for your employees
To assist your employees with their childcare decisions you should direct them to: www.childcarechoices.gov.uk
If your employees are considering childcare vouchers the following link will help them assess if it’s of benefit to them or not (as childcare vouchers may affect their tax credits): www.gov.uk/childcare-vouchers-better-off-calculator
If your employee wants to apply for Tax-Free Childcare or sign in to their childcare service account they can do so here.
As mentioned in our previous article on this topic (click here access it), for parents to avail of the Tax-Free Childcare scheme they must use a childcare provider that is signed-up to the scheme. Childcare providers can sign-up to Tax-Free Childcare here.
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Here at Paycheck Plus we strive to make our clients become the best employers that they can be. As part of this we provide employee support services on behalf of our clients. This includes training, workshops and providing an employee helpline where our payroll specialists answer client employee queries and provide advice on minimising employee tax liability which ultimately increases their net take-home pay at no additional cost to the employer.
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Paycheck Plus – Payroll Excellence