You could be better off using Childcare Vouchers

The Government reported on the consultation for Tax-free Childcare last week.  This is due to be introduced in autumn 2015.

It has been confirmed that Childcare Vouchers will remain in existence for the foreseeable future, as long as parents want to use them.

There are circumstances where parents will be better off choosing to use Childcare Vouchers rather than Tax-free Childcare.  Here is an info-graphic which helps to explains who will be better off using Childcare Vouchers:

Please note: all children over the age of 3-years old (and some 2-year olds) receive 15 hours free childcare each week.  This needs to be reduced from childcare fees before looking at the figures above.

If you have any queries, please contact us on 0330 333 9100 or email information@busybeesbenefits.com.

Introducing our new campaign

Last year Busy Bees Benefits campaigned to make childcare more affordable by calling on the Government to raise the cap on Childcare Vouchers. This campaign received an overwhelming response and it is clear that working parents want more financial support with their childcare costs to enable them to continue to work.

As you will have heard, the Government is launching a new childcare funding scheme in the Autumn of 2015 to provide working parents with support to help make their childcare more affordable.

The new Tax-free Childcare scheme will see the Government subsidising childcare costs for all children under the age of 5 providing both parents in a household are working or lone parents are working.

There are however, compared to the savings parents can make through using Childcare Vouchers to pay for their childcare, many working parents will be worse off under this new scheme.

Dedicated to helping working parents save money on their childcare costs, Busy Bees Benefits has launched their new ‘Mind the Gap – Raise the Cap’ campaign.

About the campaign:

Under the new scheme, the Government will be contributing 20% of childcare costs. The 20% subsidy will apply to childcare costs of up to £6,000 per child, per year, saving up to £1,200 per child, per year, for children under the age of 5.

Childcare costs rise each year in line with staff costs as the largest outgoing for childcare providers is wages. The average cost of childcare is currently £7,500, therefore, not only is the £6,000 cap already below average, by the time the scheme is implemented the gap between the savings available and the cost of childcare will have widened further.

Consequently, to preserve the value of the Tax-free Childcare scheme, the Government would need to increase the cap each year. 

An e-petition has been set up which aims to:

• Prompt the Government to increase the cap in line with rises in childcare costs before the scheme is implemented. 
• Persuade the Government to commit to reviewing and increasing the cap annually in line with National Minimum Wage changes. 

*Figures derived from Laing & Buisson Children’s Nurseries UK Market Report 2012 

The e-petition:

What can you do to help?

1. Sign the e-petition. 100,000 signatures are required to make the issue eligible for debate in the House of Commons.
2. Ask all your friends, colleagues and family to sign the petition. 
3. Follow us on Twitter and retweet links about the campaign. 
4. Like us on Facebook and share links about the campaign.

For more information about the campaign please visit www.busybeesbenefits.com

How to save money on your childcare costs now!

The Tax-free Childcare scheme is due to be implemented in 2015.  A consultation is due to take place before the scheme is put in place to provide further details about the scheme.

There is a long time between now and when the scheme will come in.  Now is the time parents should be making savings to help manage their household budgets.  For many working parents, the heaviest burden on their finances is childcare.  Childcare can be one of the largest monthly bills and as such some parents have even considered giving up work as a large proportion of their wages is spent on childcare.

When parents look at their childcare options they are often uninformed about the financial support they can get to help with childcare costs.  Parents want affordable childcare without having to compromise on quality – Childcare Vouchers are the answer. 

Childcare Vouchers can appear to be complicated; Busy Bees Benefits, a renowned Childcare Voucher provider is on hand to make them as simple as possible:

What are Childcare Vouchers?

Childcare Vouchers are available from your employer to help you save money on your childcare costs.  They are then used by parents to pay their childcare provider.

How do they work?

Vouchers are deducted from your salary before you pay tax and National Insurance.  Tax and National Insurance is then taken from the remaining salary which means you pay less tax, saving up to £933^* per year.

Basic rate tax payers are entitled to exchange up to £243^* per month from their wages in return for the same amount of vouchers.  Higher rate tax payers can exchange up to £124^* per month and additional rate tax payers can exchange up to £97^* per month.

Childcare Vouchers are available per parent, which means that both parents can join their employers Childcare Voucher scheme, potentially doubling the savings.

Where can they be used?

Childcare Vouchers can be used to pay for any registered childcare for children up to the age of 16^**.  Childcare providers must be registered with Ofsted or an equivalent governing body.  They can be used to pay for:

• Nurseries
  
• Child minders
• Play schools and pre-schools
• Nannies and au pairs
• Créches and play schemes
• Before and after school clubs
• Holiday clubs and activity camps

How can you get Childcare Vouchers?

To start using Childcare Vouchers, you will need to join your employers Childcare Voucher scheme.  Check with your HR department to see if your employer runs a scheme, if not you can contact BusyBees Benefits with your employer’s details and they will get in touch to set up a scheme.

Once registered to your employer’s scheme, you can have a deduction from your wages the next time you get paid. 

How do you pay your childcare provider?

Busy Bees Benefits operates a simple system which allows you to log in to your account, select your childcare provider and make payments straight away^*.  Busy Bees Benefits will automatically check that your childcare provider is registered with Ofsted or an equivalent governing body. 

Not all Childcare Voucher providers offer this service and registering a childcare provider can be more complex.

What happens if your childcare is more than £243 per month?

You can still use Childcare Vouchers.  Simply pay the outstanding amount using another payment method.

Childcare Vouchers vs Tax Credits

If you are a parent claiming the childcare element of Working Tax Credits (Universal Credit), you might be better off continuing to do so.  Before signing up to a Childcare Voucher scheme you can use this Government calculator to see which is best for you: http://www.hmrc.gov.uk/calcs/ccin.htm

What will happen to Childcare Vouchers when the new Tax-free Childcare scheme is introduced?

The Government has proposed a new Tax-free Childcare scheme which will see 20% of a child’s childcare costs being subsidised by the Government.  The new scheme is due to be implemented in Autumn 2015.

Childcare Vouchers will remain in existence for a further five years after the Tax-free Childcare scheme is in place.  Those already using Childcare Vouchers can continue to do so; however the scheme will not be open to new entrants once the new scheme is launched.

There will be winners and losers with the new scheme as some parents will be able to save more using Childcare Vouchers.  Those who will be better off using Childcare Vouchers should join their employer’s scheme now to maximise the savings available.  For more information about the new scheme visit: www.taxfreechildcarescheme.com.

For more information about Childcare Vouchers please visit: www.busybeesbenefits.com

*Subject to individual circumstances.

**A child qualifies for Childcare Vouchers up to the first September after their 15^th birthday (or the first September after their 16^th birthday if they are disabled.)