The current employer childcare voucher scheme has been given a six month reprieve in an announcement made by the Education Secretary Damian Hinds. This decision was taken on the back of mounting pressure from MPs who voiced their concerns against the government backed tax free online voucher scheme, which was scheduled to become mandatory for new applicants next month.
The alternative Tax-Free Childcare scheme was first introduced in April 2017 with the intention of providing government assistance in dealing with ever increasing childcare costs. Under the new scheme, parents are required to open an online account on the HMRC website, in which the government would be able to deposit tax free payments up to a total of £2,000 per child, per year.
This saving scheme was to become mandatory for all new applicants as of April this year, with the disclaimer that those already using the pre-existing employer childcare voucher scheme would be free to continue to do so. Whilst the employer led scheme is not mandatory, those organisations that choose to offer the scheme pay eligible staff weekly vouchers of up to £55 of sacrificed salary.
However plans have now changed with critics blaming a flawed implementation process which has shaken the confidence in the government’s online scheme. It is estimated that thousands of parents have been unable to simply set up an account on the HMRC website, whilst those that were successful in doing so have been unable to access the funds deposited to them due to various glitches. Already nearly £40,000 in compensation has been paid to parents to cover expenses and inconvenience, as users struggle in vein to work the new system.
Speaking on the matter, MP Emma Little-Pengelly made efforts to acknowledge the benefits of the pre-existing employer childcare voucher scheme, citing research that showed some families would be “better off” under this employer led scheme which has enabled many parents to reduce the cost of childcare. Indeed figures show that almost 450,000 parents have already benefited from this scheme, each saving up to £933 in tax and National Insurance costs on their childcare per year.
Supporters believe organisations should consider taking advantage of the extension period and implement this process in their organisation. The scheme is free to join and could potentially save the organisation money as the vouchers issued are free from National Insurance deductions. In addition, actively promoting this ‘family-friendly’ scheme is an opportunity to highlight an organisations' commitment to the wellbeing of its employees, creating a more accepting and harmonious company culture.