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 added.
“It also helps to raise a company’s external profile as a
good employer.”
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
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