Benefits bosses are hurriedly introducing childcare voucher schemes to take advantage of tax relief legislation. Employers such as Compass, Barclays, Eli Lilly and Herefordshire Council are all launching or re-launching schemes before April 5 to ensure staff get maximum discounts.
June Woodhouse, HR director at Compass, which has just launched a scheme for its 95,000 staff, said: "I do feel strongly that as a big, blue chip employer in the UK, we should be in the childcare voucher arena as of April. Quite frankly, anybody who is paying for childcare and does not have that arrangement is unfortunate because it’s a great opportunity to save money and it’s money that the taxman would normally have, so why not give it back to the employee?" Barclays has seen the number of employees joining its childcare voucher scheme almost double in the run up to the changes.
Catherine Redmond, head of benefits at the high street bank, said: "There aren’t that many tax breaks available, so as an employer if you’re not doing it, your employees are missing out." Redmond added that Barclays was careful to communicate the scheme early to ensure staff had time to register childminders and that those taking the government’s Working Tax Credits did not lose out by participating. The number of higher rate taxpayers has increased as they can now save significant sums compared to only 1% National Insurance (NI) contributions previously. However, minimum wage issues continue to vex employers.
Compass’ Woodhouse said that minimum wage staff must not be forgotten when sacrificing their salary. "There’s a number of us [large employers] that were hopeful that the government might review that. One does feel that [lower paid employees] are being penalised by not being allowed to participate. I can understand why, but equally it’s that group of people who could benefit most from childcare vouchers." For employers that already have schemes in place it is important that they check that their schemes satisfy all the requirements.
Herefordshire Council updated its employment contracts to take account of new salary sacrifice measures for vouchers. Amanda Attfield, personnel manager for employee and organisation development, said she expects a number of previously sceptical employees to get involved.
Woodhouse added that she was surprised that even more hadn’t been made of the tax savings. "I did expect a little bit more advertising from the government around the childcare vouchers, especially close to an election."