Tax-free Childcare, what Employers Need to Know

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Tax-Free Childcare is a government scheme to assist parents with their childcare costs. Companies can make payments into their employee’s childcare account. This can be done on behalf of the employee through the company payroll or supplementary payments can be made by the employer. If supplementary payments are made these are subject to appropriate deductions.

Tax Free Childcare and Employers Supported Childcare transition

Tax-Free Childcare will replace Employer-Supported Childcare, i.e. the existing “childcare voucher” scheme. Employer-Supported Childcare will not be available to new entrants after April 2018, however, parents can continue using childcare vouchers after this date if their employer continues to support the scheme.

Employees moving from Employer-Supported Childcare to Tax-Free Childcare

Employees need to provide their employer with a Childcare Account Notice (CAN) when moving from Employer-Supported Childcare to Tax-Free Childcare. A CAN is just written documentation, which can be in the form of an email, that states that the employee wishes to leave the employer’s voucher scheme and use Tax-Free Childcare. The employee has 90 days after opening a Tax-Free Childcare account to provide a CAN to their employer. Once you, the employer, have their CAN, you must terminate the employee’s access to Employer-Supported Childcare.

Assistance for your employees

To assist your employees with their childcare decisions you should direct them to: www.childcarechoices.gov.uk

If your employees are considering childcare vouchers the following link will help them assess if it’s of benefit to them or not (as childcare vouchers may affect their tax credits): www.gov.uk/childcare-vouchers-better-off-calculator

If your employee wants to apply for Tax-Free Childcare or sign in to their childcare service account they can do so here.

Childcare Providers

For parents to avail of the Tax-Free Childcare scheme they must use a childcare provider that is signed-up to the scheme. Childcare providers can sign-up to Tax-Free Childcare here.

Here at Paycheck Plus we strive to make our clients become the best employers that they can be. As part of this we provide employee support services on behalf of our clients. This includes training, workshops and providing an employee helpline where our payroll specialists answer client employee queries and provide advice on minimising employee tax liability which ultimately increases their net take-home pay at no additional cost to the employer.

To become the best employer that you can be contact Paycheck Plus today.

To ensure payroll accuracy or for more information on our payroll services simply request a callback now or call our office on +44 (0) 161 464 8720.

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