The Nannyplus Blog

Employment Law Update

April 7th, 2016

Employment Law Update

The following changes to employment law will come into effect from 6 April 2016:

  • The Employment Rights (Increase of Limits) Order 2016 will increase the maximum amount of a “week’s pay” (which is used to calculate statutory redundancy payments, the unfair dismissal basic or additional award and payments to employees in the event of insolvency) from £475 to £479 and will increase the limit on the unfair dismissal compensatory award from £78,335 to £78,962 (there is an additional cap of one year’s salary on the unfair dismissal compensatory award).
    Nannyplus Childcare Ltd: April 2016

Tax-free childcare scheme to replace vouchers from 2017

March 22nd, 2016

The government has begun providing details of the new tax-free childcare scheme, to be introduced in 2017, which supersedes the current employer-supported childcare scheme and which will be available to an estimated two million families, including those where a parent is self-employed.

The Treasury, along with HMRC and the Department for Education, has published a new guide, ‘Tax-Free Childcare: 10 things parents should know’.

This states that the scheme will be launched from early 2017 and will be rolled out gradually to families, with parents of the youngest children able to apply first.

It is available for children up to the age of 12, and will also be available for children with disabilities up to the age of 17, as their childcare costs can stay high throughout their teenage years.

All eligible parents will be able to join the scheme by the end of 2017. They will be able to open an online account, which they can pay into to cover the cost of childcare with a registered provider.

This will be done through the government website, gov.uk.

For every 80p paid in, the government will top up the account with 20% of childcare costs up to a total of £10,000 – the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children).

To qualify, parents will have to be in work, and each earning around £115 a week and not more than £100,000 each per year.

Unlike the current scheme employer-supported childcare, the new scheme does not rely on employers making the option available, which the government says means double the number of families will be able to benefit.

In addition, self-employed parents will be able to get support with childcare costs, unlike the current scheme. To support newly self-employed parents, there will be a ‘start-up’ period during which self-employed parents will not have to earn the minimum income level.

The scheme will also be available to parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave.

Parents and others, including family members and employers, can pay money into the childcare account as and when they like, building up a balance for periods where more childcare is needed such as over the summer holidays.

The guidance says there will be a light-touch process for parents using the scheme who will need re-confirm their circumstances every three months via the online system, and there will be a simple log-in service where parents can view accounts for all of their children at once.

If family circumstances change, or parents no longer want to pay into the account, then they will be able to withdraw the money they have built up. If they do so, the government will withdraw its corresponding contribution.

Alongside the new scheme, the current employer-supported childcare scheme will continue and there is no obligation for parents to switch to tax-free childcare. The current scheme will remain open to new entrants until April 2018, and parents already registered by this date will be able to continue using it for as long as their employer offers it.


Tax free childcare scheme delayed

August 6th, 2015

The implementation date of the Tax-Free Childcare Scheme (TFCS) has been pushed back until early 2017 following a Supreme Court decision. The scheme was expected to be launched later this year but was delayed as a direct result of a legal challenge to the introduction of the scheme. The legal action was instigated by a small group of childcare voucher providers who won an injunction preventing the implementation of the TFCS this autumn. The group argued that the Government’s decision to deliver the TFCS accounts through HMRC working in partnership with NS&I was unlawful and should have been subject to an open tender.

However, the Supreme Court has unanimously dismissed their appeal. As a result of the legal action, the court had placed a suspension on the development of the scheme which prevented key delivery steps from taking place during the legal proceedings.

Once launched, the TFCS will support working families with their childcare costs. The new scheme will replace the current salary sacrifice scheme and will be open to all qualifying parents including the self-employed and those on a minimum wage.

Barring any further changes, the scheme will be worth up to £2,000 per child each year and will be available initially to children under the age of 5 but will be expanded over time to include all children under 12. For every 80p in the £1 contributed by parents an additional 20p or 20% will be funded by Government up to a maximum of £10,000. Parents will be able to have one childcare account for each qualifying child. In order to be eligible to use the scheme neither parent can earn more than £150,000 a year.

Exchequer Secretary to the Treasury, Damian Hinds said:

‘We are pleased that the Government’s proposals for delivering Tax-Free Childcare have been found to be clearly lawful. This Government is absolutely clear on the importance of supporting families with their childcare costs. It is disappointing that some organisations involved in the existing scheme felt the need to take and persist in this costly and wasteful course of action, which has led to a delay in the launch of Tax-Free Childcare.’


Tax Free Childcare Scheme from Autumn 2015

May 16th, 2014

Tax-Free Childcare scheme from Autumn 2015

The Government used the 2013 Budget to announce that a new tax-free childcare voucher scheme would be introduced in Autumn 2015. Tax-free childcare was expected to provide parents with tax savings of up to £1,200 per child each year.

Following a consultation exercise, the Government has published more details about the tax-free childcare scheme, including an announcement that the scheme will be administered by NS&I rather than by existing childcare voucher providers.

The level of childcare costs covered by the new scheme has been increased since the original announcement. Initially, a 20% tax break was expected on the first £6,000 of childcare costs, providing savings of up to £1,200 per child. The scheme has now been extended to cover annual childcare costs of up to £10,000, providing savings of up to £2,000 per child.

Employers will be able to continue to set up a childcare voucher scheme until tax-free childcare is launched, meaning there is still an opportunity for employers to enjoy the National Insurance savings which childcare vouchers provide. Parents will be able to sign up for childcare vouchers until August 2015 and they can then continue to order vouchers beyond Autumn 2015, for as long as their employer continues to run the scheme. Some existing scheme members will choose to switch to the new scheme from 2015, as in some cases this will provide higher savings.

The new scheme will initially only be available in respect of children under 5, although there are plans to make it available for all children under 12 within one year.

The winners and losers

  • Tax-free childcare will provide higher savings for many parents, including the self-employed and those with high childcare costs. However, some parents are better off under the existing arrangements.
  • Parents who sign up to the current childcare voucher scheme will be able to remain in the scheme, so they will not be disadvantaged by the proposed 2015 changes. However, if they move to a new employer after Autumn 2015, they will be considered to have left the current scheme and be forced to switch to the new arrangements.
  • Some parents will not be ready to use childcare vouchers until after the new scheme starts. In some cases, these parents will receive lower savings from the new arrangements than they would have had under the current scheme.
  • The new scheme will not be available to families where either parent earns over £150,000, whereas the current scheme allows high earners to enjoy tax savings at the same level as basic-rate taxpayers.
  • The new arrangement will not provide any National Insurance savings (currently worth up to 12% for basic-rate taxpayers and up to 13.8% for employers). For some employers, this will be a significant loss, which could have a knock-on effect on the amount which they are able to spend on other employee benefits. Local authorities and NHS Trusts are among the employers who will be hit, potentially leaving a hole of hundreds of thousands of pounds in their budgets.In general, parents will only be better off under the new scheme if their childcare costs are higher than the figures shown in the table below. Parents with lower childcare costs would be better off with childcare vouchers.

Family circumstances

Level of monthly childcare costs after which tax-free childcare becomes the better option

Single parent, basic-rate taxpayer £ 389
Single parent, higher-rate taxpayer, joined childcare vouchers before 6th April 2011 £ 510
Single parent, higher-rate taxpayer, joined childcare vouchers after 5th April 2011 £ 260
Couple, both basic-rate taxpayers £ 778
Couple, one basic-rate taxpayer, one higher-rate taxpayer who joined childcare vouchers after 5th April 2011 £ 649
Couple, both higher-rate taxpayers who joined childcare vouchers after 5th April 2011 £ 521

What action should parents take?

Parents who aren’t already using childcare vouchers should ask their employers to set up a scheme now, rather than waiting until the new scheme is launched in 2015. Employers enjoy National Insurance savings from the current scheme, so it is in their interest to set up a scheme before the 2015 deadline.

Will there still be a role for employers in the new scheme?

Although the new arrangements take the onus away from employers, the Government hopes that employers will still have a role to play. Many parents use childcare vouchers as a way of budgeting for childcare costs and appreciate the benefits of their childcare payments being taken direct from salary. Employers will be able to support their employees by gradually replacing their existing salary sacrifice schemes with voluntary payroll deduction schemes. Although employers will no longer benefit from National Insurance savings, providing easy access to tax-free childcare will still allow them to enjoy the benefits of better staff engagement and higher morale.


Lovely words – Thank you !

November 28th, 2013

2 lovely comments received today from Clients – Thank you to the nannies concerned. Much appreciated, we are only as good as you !

‘Payment has been made today for the invoice below – thank you once again for such an outstanding service.

Lyndsey is proving to be the best decision, she is exceptional and Rob and I are so impressed with her, and R and J have both taken to her extremely well, so we are all very happy!’

 

‘Please see attached cheque in respect of Faye, we are so grateful to you, Faye is such an asset, we are very grateful that you introduced her to us.’


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