You may be aware that in this year’s Budget, the Government heralded new plans for a tax-free childcare (TFC) subsidy to be introduced in autumn 2015 as “a benefit worth up to £2,000 per child for as many as 1.9 million working families”.
Sounds good, but some are suggesting the new scheme may turn out to be a damp squib and not the welcome alternative envisaged for those using the current voucher-based scheme.

Tax experts claim that working parents paying basic rate and who spend less than £5,720 on childcare, might be better off staying in their existing childcare voucher scheme rather than joining the new TFC scheme. Furthermore, working parents spending between £5,720 and £7,321.60 would definitely be worse off if they switch from the current scheme to the new one.

Given this uncertainty over the benefits of the new scheme, if you are an employer perhaps now is the time for you to discuss it with your finance experts so you understand what you might have to put in place for its introduction.
Once you’ve done that, and if you are going to change the current scheme, you will need to discuss with your HR advisors the impact on your employment policies.

Finally, perhaps consider offering your affected employees access to financial advisors who can help them understand the potential impact on them of moving to the new TFC scheme.

Of course, all this may change following the General Election in May 2015, but it may not, so putting some time and effort now into considering what you will do could save you time and a frantic rush later, particularly as the election of any new Government always seems to herald a rash of changes to employment and tax law.

Helen Skepper – Research and Communications Advisor
Su Allen HR