Need to know:
- The government’s new tax-free childcare scheme is due to launch from early 2017 and will take the responsibility of providing access to childcare support away from the employer.
- The existing childcare voucher scheme will remain open to new entrants until April 2018.
- Employers should encourage employees to assess their own situations to determine whether the tax-free childcare scheme or childcare vouchers are most beneficial to their situations.
The new tax-free childcare scheme, which will launch from early 2017, will see the responsibility for providing access to childcare funding support shift from the employer to the government, with administration duties transferring from an organisation’s benefits team to the employee.
The tax-free childcare scheme will be rolled out while the current childcare voucher scheme remains open to new entrants until April 2018. After this date, only those who are already in an employer’s scheme will be able to continue to use childcare vouchers. Employers have long been used to childcare vouchers forming part of their family-friendly benefits strategy, so what options will they have when the scheme closes?
Family friendly
Employers are concerned with supporting working parents for a variety of reasons. Not only does it demonstrate that they offer a supportive workplace, but it can also help to look after employees’ financial and emotional wellbeing, with the knowledge that their childcare funding is taken care of.
Ben Black, director at My Family Care, says: “There are lots of reasons why employers should support their working parents: flexible working, gender diversity, leadership diversity, ageing workforce, and wellness.”
Employers also want to support their employees and alleviate their worries about childcare, so they can still perform at work, says Ian McMath, chief executive officer at Sodexo Benefits and Rewards Services. “Effectively, one of the issues [employers] have got is that at the moment they are seen to be very caring because they take all the hassle away from the employees because it’s all done through payroll,” he adds. “The new scheme is very [administration]-heavy on the parents.”
In an ideal world, some providers in the childcare voucher industry would like to see both schemes running in tandem in order to give working parents the greatest possible range of choice. Jacquie Mills, chair of the Childcare Vouchers Providers Association (CVPA), says: “That’s what we feel would be the fairest to working parents so that they could determine which is best for them and switch between them when their circumstances change.”
Benefits for carers
So, with the responsibility to promote and provide access to childcare support being taken out of their hands, will employers communicate the government’s tax-free scheme as part of their caring benefits policies?
Proactive employers are encouraging employees to review their current arrangements now and assess which arrangement will best suit their needs before the deadline for joining childcare voucher schemes passes. Marena Mieras, senior flexible benefits consultant at Mercer, says: “For employees who are better off in the employer-sponsored arrangement, communications are being cascaded through the workforce now to ensure employees are taking advantage of this arrangement before it closes, even if it means selecting a low denomination voucher in the interim.”
Employee retention is a key factor in providing benefits for carers, so any opportunity to help employees should be utilised to full effect. “[Employers] still need to retain and attract the right talent, it’s not just about the tax saving they can give to employees, it’s about ‘how can I help them within the whole life environment so they contribute to more to our business?’” says McMath.
To this end, employers should make employees aware of any benefits that can support them in their working lives. Louise Wesley, operations director at Busy Bees Benefits, says: “The employer does have a responsibility because there’s the work-life balance, the recruitment and retention side of it, and making sure, from a motivation aspect, that staff know what’s available, and that savings can generate so much and go towards their everyday living costs.”
But while tax-free childcare is just one piece in the benefits for carers jigsaw, employers should take this opportunity to demonstrate all the supportive initiatives they have in place. As Black says: “There are loads of things practically that [employers] can put in place, and the best employers do [for example] help finding childcare, help finding eldercare, emergency childcare, and maternity coaching. Those are the main practical things that [employers] do, and post-vouchers going, more and more will do that, not because they have to but because it makes business sense.”
