Following my post last week re potential changes to Employee Benefits in the March Budget statement, the first of the stories is already up and running.

The attached post from the BBC News website gives the scant information currently available: https://www.bbc.co.uk/news/uk-politics-21833929

So what does this tell us?

It seems that the intention is to withdraw existing Childcare Vouchers by 2015 (for new savers), to be replaced by the new allowance mentioned in the above article. The new allowance also seems to be via a new form of voucher system, which could cause some confusion I suspect.

Although Childcare Vouchers have not been part of the benefits landscape for that long (they were a new introduction under the Labour Government around 10 years ago), they have been in the firing line several times since their introduction. Followers of the blog may remember a previous Government u-turn on restricting tax reliefs only a few years ago. So although the current indications are that the current tax-efficient vouchers will soon go, time will tell if this is really the case.

I particularly expect a backlash from families with single earners (and in fact my family is one such example) who will not be able to benefit from the new proposals at all (whereas they can under existing Childcare Vouchers). The initial proposals seem to allow for existing Childcare Voucher savers to continue to use this option past 2015 however, so this benefits will not just disappear from the benefits landscape overnight.

On a more practical level, and assuming that the current Childcare Vouchers do go, what can employers do to smooth the issue for their employees?

Well it’s certainly important that those that can benefit from the Vouchers are still made aware of them. We have two years until the changes bite, and it would be a shame to miss out on this significant tax break for that period.

It’s also worth telling new parents that they can start saving now, even though they may not yet need the Childcare provision. This way they can build up a tax-efficient war chest of Vouchers in advance, which can be used as and when actually needed.

And once we have the full details of this proposal, I would encourage employers to communicate with their staff to tell them that nothing changes this year, or indeed next. It’s worth making employees aware that changes are ahead, and that more information will be forthcoming once the detail is known.

Whilst we are on the subject of Childcare, employers should also keep in mind that it may be possible to help employees retain some Child Benefit as well through the use of Salary Sacrifice (which in fact is the mechanism for Childcare Vouchers at the moment). For more on that idea see my post from earlier this year which can be viewed here: http://goo.gl/DNoXI

I will doubtless be posting again re this subject, and the budget, later this week.

Best regards

Steve