Employers must keep abreast of alterations to childcare funding

Employers must keep up with changes to tax and National Insurance (NI)
regulations for childcare provision, or risk a ‘nasty shock’, according to the
chief executive of the National Childminding Association.

Gill Haynes said that from April 2005, the changes will radically alter the
way that employers can help to fund childcare.

Currently, employees are exempt from NI on childcare vouchers provided by
their employer. These can be used by parents towards a range of provisions,
including Ofsted-registered childminders and day
nurseries. In the future, they can also be used towards less formal childcare,
including nannies, breakfast clubs and childminders caring for children over
seven years of age.

But from next year, employees stand to receive both NI and tax benefits on
the first £50 per week of the employer-provided childcare vouchers. However,
Haynes said the catch is that the new extra benefit will only be available if
the childcare is registered or approved.

Exact details of the change are still to be finalised, but it is likely that
a new voluntary approval category will be introduced to cover childcare
providers currently considered to be unregulated, such as nannies and breakfast
clubs. It is thought to be unlikely that relatives looking after children will
qualify for such approval.

Haynes said: "Our important message to employers is; be aware of the
changes, help your employees plan for them and, come 1 April next year, there
won’t be any nasty shocks in store for companies and their staff.

"Companies that provide childcare vouchers need to be aware that their
employees could miss out on tax and NI benefits from April 2005 which could be
costly for them.

"Employer-supported childcare is an important business benefit that can
have a positive impact on many company policies, including recruitment and
retention, productivity and performance and the work-life balance," Haynes

"It also helps to raise a company’s external profile as a good

The National Child Minding Association and Accor
Services are holding a free event, supported by Personnel Today, to talk
employers through the issues. The ‘Helping Families, Helping Business’ event
takes place on 20 September 2004.

For more information, go to www.ncma.org.uk

By Quentin Reade

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