Employees taking up childcare vouchers from April 2011 for the first time will no longer benefit from tax and national insurance breaks.
Employees who are existing recipients of childcare vouchers with have their tax and NI breaks withdrawn from April 2015.
We want to hear what employers, childcare providers and others in this field feel about this announcement.
This was one of the only good things that the Government have done for a long time. The savings it gives people for not only full time nursery care but before and after school and particularly holiday cover, has been an enormous help. We have a number of people in our employ, myself included, who find cover for school holidays extremely difficult to come by and very expensive. I do not see how they can think that giving free childcare places to 2 year olds is going to compensate for this.
Where is this documented.
From a concerned parent
I agree with the concerns listed above. Whilst the free childcare places is great for parents with children of aged 2 and below, statistically speaking there are more people out there with children older than this that also need this benefit. What a shame, as it's a benefit I have personally marketed to employees at my company.
Another salary sacrifice shocker - at least this time Mr Brown gave more than 5 minutes notice (remembering back to the Home Computing Initiative a few years back). The removal of the tax breaks is recognition of how good the scheme was for employers - unfortunately too successful as it has become too costly for the government.
Organisations are unlikely to pay the admin charges without the NI savings - and employees will see no benefit of having £200 of vouchers, versus £200 in cash. So the HMRC statement about being well entrenched and still being offered is meaningless.
The interesting aspect will be to see how CCV providers respond. Unless there are significant discounts on offer or additional benefits (e.g. emergency childcare), this alongside the problems associated with the issues of non-cash benefits during maternity will mean that many schemes will be removed by employers.
Chris,
I couldn't agree more with your comments. I run a business that provides emergency childcare so would be itnersted to chat to your outside this forum if of interest.
Ben Black
To reply to Daftbird - details will be announced in the Pre-Budget Speech which is usually in November. You can also read details here (and see link to the petition against this change): http://www.employeebenefits.co.uk/item/9508/23/5/3
It's just ridiculous, what about all the parents who use childminders? Even if you send your child to the "free" place at the nursery for 2 hours a day you still have to pay the childminder. So the nursery might benefit but the parents lose out again!
Such a shame if this does happen. I heard Gordon Brown give an example of these being used for "horse riding and such" yesterday...If only!!!
This is an important and valuable benefit. How the government can keep a straight face when saying the provision of childcare for 2year olds (approx £1400 value versus £1000average p.a for CCV) is going to be a better benfit than the tax relief currently on offer amazes me.
This is one of the best employee benefits available, I hope it stays...
I understand that the 4 major childcare vouchers are lobbying the Government to reverse this policy .... does anyone know mor on this? And what do the Conservatives say .... all I can find is that they will review the cost of retaining the voucher tax allowances.
The articles I read only talk about removing the tax benefit. Historically vouchers were free of NIC .... what is the proosed NIC situation?
Stewart
There is no reason for the conservatives to comment - like most things regarding childcare they are playing their cards quite close to their chests.
If you want to get a feel for the direction the Conservatives might take then have a look at the Little Britons report which was produced by a right wing think tank last year called The Policy Exchange. In summary childcare funding is a mess and needs an overhaul. So Sure Start, vouchers and tax credits were all in the firing line already replaced probably by putting more money directly into the hands of families/parents/carers.
There are lots of places you can find information about the campaign from the providers lobbying against this policy.
You can visit this blog: http://www.vouchersblog.co.uk/
View (and sign!) the Downing Street petition: http://petitions.number10.gov.uk/keepvouchers/
Or follow the campaign on Twitter: http://twitter.com/SimonSays_CVS
There's also a Facebook group set up: http://www.vouchersblog.co.uk/facebook
Given there are over 732,000 two year olds in the UK, 250,000 free childcare places seems like a bit of a farce. I have worked under Gordon Brown in the Treasury and know he’s not a bad guy, but this move does very little to encourage highly skilled mothers back into work after childbirth, which damages the UK economy and extends the gender pay gap.
The good news is that organisations can still benefit from the scheme up until 2015 if they initiate it before April 2011. What’s more, the popularity of the scheme may force the government to abandon its plans to abolish it after all.
For more information read our blog
‘Government phase out childcare vouchers from 2011’
If the employee enrolls prior to April 2011 then all is fine. What happens if they change employment? Do they automatically lose relief? If not, how do they propose companies manage this?
Mark
This is indeed a very good point. If you are in the scheme but move employment after April 2011 then you will not be able to sign up to the scheme again. Gordon Brown's proposals are going to have a much greater impact than he has perhaps anticipated.
Furthermore, the free childcare places that he is proposing to replace the voucher scheme with will only benefit parents with 2 years olds from disadvantaged communities, 2 hours a day in England only. What about parents in Scotland, Wales and Northern Ireland?
In direct response to Gordon Brown's proposals, the ChildcareSOS campaign has been set up by Employers For Childcare, a charity which provides advice and information to working parents. In addition to the Downing Street petition, please email your support for our campaign to ChildcareSOS@employersforchildcare.org. You can also join our Facebook page ChildcareSOS to keep abreast of the progress with our campaign.
There is no better time to bring this topic to the fore again, with a new government in power. Even if we can't manage to reverse this decision, there is still plenty of time to get your employer to join the scheme. As a current provider of childcare vouchers, we advise that as many people as possible take advantage of this scheme as early as possible, even if you do not maximise the benefits, you will still have taken part, which will entitle you to continue obtaining the vouchers until 2015.
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