Supporting Working Parents

An employer can support a working parent by assisting with the cost of approved childcare schemes up to the child's 15th birthday (or 16th if the child is disabled).
The Inland Revenue's Salary Sacrifice Scheme provides a way for financial support to be offered by the employer resulting in the employee making savings in both tax and national insurance. Salary Sacrifice means that an employee formally agrees to a reduction in their taxable salary and instead receives an equivalent amount in childcare support.

The first £50 per week of childcare costs will be exempt from tax and national insurance, if the qualifying criteria are met.

Employees must agree that their salary is reduced by the amount paid over for childcare costs. It is, however, important to bear in mind that this arrangement could affect the employee's entitlement to tax credits.

As ever, there are guidelines to work within which include:

the definition of approved childcare

procedures to demonstrate that the salary has been sacrificed

the availability of the scheme to all employees

a signed declaration of parental responsibility by participating staff

amended contracts of employment to reflect the reduction in salary

Full details of the criteria can be found on the Inland Revenue website.

There are various ways in which the scheme can operate, which include the use of a Childcare Voucher provider, workplace nurseries or by the employer directly contracting nursery places that are made available to their staff.
Recruiting and retaining good staff is crucial for any employer.
With parents representing almost 40% of the workforce within the UK, quality and affordable childcare is important to employers and employees alike.

If you would like to discuss this scheme, please contact Les Styles on 01925 761600.