Childcare costs are on the rise with average nursery fees costing £632 per month. The government has announced a new childcare funding system which can help to reduce these costs. The new scheme, available from Autumn 2015, will mean funding is offered to households where both parents work and to single parents who work. The funding will be allocated per child.
The new scheme will eventually replace the current Childcare voucher scheme. Parents can continue to benefit from the savings provided by Childcare Vouchers for a period of five years after the new scheme has been implemented.
The new funding arrangements will be open to more parents; those employed, self-employed and parents on low incomes or minimum wage will be eligible to use the funding.
How will the new scheme work?
· The government will be subsidising 20% towards a child’s registered childcare costs. The remaining 80% will be paid by parents. So, in effect, for every £100 paid for childcare parents pay £80 and the government pay £20.
· Parents will be able to save up to £1,200 per child, per year (the 20% subsidised funding is capped on childcare costing up to £6,000 per child, per year).
· Parents do not have to rely on employers to offer the scheme; they will be able to choose a voucher provider to manage the funds received from the government, selecting the one which best suits their family needs.
· Voucher providers collate the funds from the government to pay registered childcare providers directly.
Take advantage of savings available now
As Childcare Vouchers will still be in existence for some time to come, parents should join their employers Childcare Voucher scheme to save up to £933 per year on the cost of childcare (over £1,800 if both parents join a scheme.)
If your employer does not run a scheme; contact us with your employer’s details and we will contact them to set up a scheme – click here to contact us.
What do the changes mean for employers?
The new scheme will not be offered by employers. However, to help employees maintain their rights to the maximum support available through Childcare Vouchers, employers should continue to offer Childcare Vouchers to its employees. As an organisation you will also be able to save over £400* per employee, per year as Childcare Vouchers do not attract Employers National Insurance contributions.
If you are an employer and do not currently run a scheme, contact us to set and help your employees to save money on their childcare costs.
*Subject to individual circumstances.
