New UK childcare voucher scheme to “plunge employers into unknown” New UK childcare voucher scheme to “plunge employers into unknown”

New UK childcare voucher scheme to “plunge employers into unknown”
23 Mar 2018

The UK government has decided to extend its childcare voucher scheme for another six months – but the system set to replace it could well cause added confusion for employers, experts have warned.

Education Secretary Damian Hinds agreed to extend the existing scheme until October this year after the Opposition forced a vote on key childcare-related issues in the House of Commons. The current employer-operated scheme was due to close to new entrants in April this year. It enables working parents to fund childcare through their pre-taxed salary with weekly vouchers worth up to £55 (US$77).

An alternative, government-backed, tax-free childcare scheme, which is set to replace the voucher system, is already up and running. But since its launch in 2017, the initiative has experienced problems, with some fearing it will force parents to pay childcare costs up front.

Under the new system, working parents – including those with self-employed status – who are earning more than £120 (US$168) per week but less than £100,000 (US$140,000) a year will receive government top-up contributions to help meet up annual childcare costs of £10,000 (US$14,000) for every child aged under 12.

For every £0.80 (US$1.12) contributed by parents, the government will add £0.20 ($0.28), which amounts to an extra £2,000 (US$2,795) per child, or £4,000 (US$5,589) if the child is disabled.

Kate Palmer, head of advisory at HR, employment law and health and safety consultancy firm Peninsula, told People Management that the extension of childcare vouchers could lead to increasing numbers of workers being on different schemes, which could lead to “internal confusion” in payroll and administration terms.

Meanwhile, Jeff Fox, principal at Aon Employee Benefits, said employers needed clarity as to whether the extension was likely to stay temporary or become permanent. "Employers will be plunged into the unknown," he warned. "They will have to decide whether to open the scheme again, and many have spent time, resources and money on closing it."

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

 

 

The UK government has decided to extend its childcare voucher scheme for another six months – but the system set to replace it could well cause added confusion for employers, experts have warned.

Education Secretary Damian Hinds agreed to extend the existing scheme until October this year after the Opposition forced a vote on key childcare-related issues in the House of Commons. The current employer-operated scheme was due to close to new entrants in April this year. It enables working parents to fund childcare through their pre-taxed salary with weekly vouchers worth up to £55 (US$77).

An alternative, government-backed, tax-free childcare scheme, which is set to replace the voucher system, is already up and running. But since its launch in 2017, the initiative has experienced problems, with some fearing it will force parents to pay childcare costs up front.

Under the new system, working parents – including those with self-employed status – who are earning more than £120 (US$168) per week but less than £100,000 (US$140,000) a year will receive government top-up contributions to help meet up annual childcare costs of £10,000 (US$14,000) for every child aged under 12.

For every £0.80 (US$1.12) contributed by parents, the government will add £0.20 ($0.28), which amounts to an extra £2,000 (US$2,795) per child, or £4,000 (US$5,589) if the child is disabled.

Kate Palmer, head of advisory at HR, employment law and health and safety consultancy firm Peninsula, told People Management that the extension of childcare vouchers could lead to increasing numbers of workers being on different schemes, which could lead to “internal confusion” in payroll and administration terms.

Meanwhile, Jeff Fox, principal at Aon Employee Benefits, said employers needed clarity as to whether the extension was likely to stay temporary or become permanent. "Employers will be plunged into the unknown," he warned. "They will have to decide whether to open the scheme again, and many have spent time, resources and money on closing it."

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

 

 

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