It’s one of those times of year (the other usually being late December) when we commentators in the employee benefits space are suddenly hit with a number of Consultation responses from Whitehall departments as they attempt to clear their work commitments before the holiday season.
And, with this in mind, yesterday witnessed HM Treasury’s response to the consultation on childcare account provision.
Was it earth shattering? Well, no to be frank. The long and the short of it was that the response confirmed that the sole provider of Tax Free Childcare (the replacement to Childcare Vouchers from autumn 2015) will be National Savings and Investments (NS&I). Frankly, this outcome was never in serious doubt as far as I could see.
There is little else there of serious importance to employers at this time, but for those that want to read through the entire document, this can be accessed via the following link:
The introduction to the document does however reconfirm that “Existing members of Employer-Supported Childcare will be able to choose whether to remain on their Employer-Supported Childcare scheme or move to the new Tax Free Childcare scheme (if they are eligible).”
Which in less convoluted speech means that if an employee is already a member of an employer’s Childcare Vouchers scheme, they will be able to continue in such a scheme if they wish to do so.
Now, as we have previously covered on this blog, there are some family groupings that will be worse off under the proposed Tax Free Childcare offering when compared to Childcare Vouchers. And there are others that currently qualify for Childcare Vouchers but who won’t be eligible for Tax Free Childcare. Or to put it another way, there are quite a few families that stand to lose-out in the shake up proposed next year.
This is why the Government have allowed such families to retain their existing rights under employer-sponsored Childcare Voucher schemes after the commencement of Tax Free Childcare.
So – and this is the important bit – there is a last chance here for employers to inform their employees of the value of Childcare Vouchers. Anyone who “gets in” to the Childcare Voucher system before next autumn will be allowed to retain this valuable state support – even if the new system will not help them.
Employers who promote this point will be backing a true win-double.
On the one hand they will be helping their employees cope with a major everyday living expense – which will possibly help avoid absenteeism and improve employee relations and engagement.
On the other hand, any employee who will be worse off (or unable to benefit at all) under Tax Free Childcare will only retain their rights to Childcare Vouchers after next autumn if they stay in their current employers Childcare Voucher scheme. Or to be blunt about it, if they leave the employer for another job they will face the loss of this valuable assistance. So this could genuinely be a very strong employee retention tool for employers – and at zero cost as well!
I admit it’s not often that I am the bearer of genuinely good news for employers – but I feel the above may be one such occasion. So for my money this is one runner well worth backing in the employee benefits race.