Childcare vouchers are a long-established government-led employee benefit for all sizes of company – but adoption of these vouchers is not yet universal in British companies. These vouchers have been vital for many working parents by saving money and helping them juggle their work-life commitments. However HMRC has announced projected changes in April 2011 which will mean a reduction in the tax relief that some parents would normally have received.
Currently employees on a higher salary receive a greater tax saving on their childcare benefits than those who are paid at the basic rate. However from April next year, the amount of tax savings available will be the same for all employees. This will be set at the current basic rate. The changes will mean that anyone who joins an employer- supported childcare scheme from 6th April 2011 will receive a lower level of income tax exemption than now if they are a higher or additional rate tax payer.
It is therefore becoming increasingly important for parents to sign up now, before they lose out on these extra savings for good. In addition to this, the months of November and December are known as ‘benefit windows’ for many companies. ‘Benefits windows’ refer to the time of year when employees are asked to select their employee benefits for the following year. In light of the changes, this year’s benefit window should be all about childcare vouchers and HR departments should be urging their staff to seriously consider these benefits.
What many do not realise is that childcare vouchers can be used for children up to the age of 16 on a wide range of activities, from pre-school nurseries to after-school activities, summer camps and even boarding school. Failing to sign up before April 2011 will mean that many new parents will lose out over a potential 16-year span, which obviously amounts to a substantial loss. Added to this, it is important to remember childcare vouchers are equally applicable to working fathers, doubling the savings parents currently enjoy as long as they join before April 2011.
An interesting piece of research conducted by Tesco magazine has estimated the true value of a Mum’s worth – and it’s a staggering £1,425,104 per child from birth to 18. In the course of one child’s life, a mother will spend over 88,000 hours child minding, equating to more than £600,000. The average wage for a registered childminder is £3.54 per hour during the day, which can leap to £10 per hour for after-school care. This works out as an average of £6.77 per hour
This not only puts into perspective the amount of time and money parents spend getting their children to maturity but also the attractiveness of employers who support their hard working mothers and fathers. Childcare vouchers are central to this, emphasising that you as an employer are caring towards the parents in the company, and ultimately saving those parents a great deal of money.
In no way should a financial cost be put on parenting, everyone knows that parents are priceless. However if there is a way of helping parents during these tough economic times, we should take every opportunity.