CHILDCARE VOUCHER SCHEME POLICY AND PROCEDURE 1. SCOPE

Transcription

1 CHILDCARE VOUCHER SCHEME POLICY AND PROCEDURE 1. SCOPE This policy applies to all qualifying individuals within Abbeyfield Scotland Limited (ASL), regardless of grade or position, level of salary, length of service, permanency of contract or gender. 2. AIM It is ASL's aim to support employees to balance work and family commitments successfully, and recognising the need to support working parents, ASL has made arrangements with Employers for Childcare Vouchers to provide a voluntary childcare voucher scheme ('the scheme') to its employees. The scheme allows qualifying individuals to make tax and national insurance savings on childcare costs through salary sacrifice. 3. DEFINITIONS Childcare vouchers Childcare vouchers are an acceptable method of paying for registered childcare. Parents or legal guardians can make savings on their income tax and national insurance contributions (NICs) and choose to exchange some of those for childcare vouchers. Salary sacrifice A salary sacrifice occurs when an employee gives up part of their cash element of pay due under their contract of employment and receives an equivalent amount in childcare vouchers. Salary sacrifice should not reduce your cash pay to below the level of National Minimum Wage (NMW). Human Resources (HR) can advise you on current rates of NMW. Registered/approved childcare Childcare vouchers are used to pay for registered or approved childcare for a qualifying child, e.g. childminder, day nursery, holiday schemes, afterschool and breakfast clubs etc. Employers for Childcare will only be able to administer childcare vouchers if the childcare provider is a registered carer with a Unique Reference Number (URN) or approval number. Lifestyle change A 'lifestyle change' is defined as something which significantly changes your childcare requirement, e.g. pregnancy, redundancy, death of a child/partner, redundancy of a partner, leaving ASL, a change in working hours or your child starting school. 4. OVERVIEW OF THE SCHEME The scheme works through the employee taking the opportunity to exchange, or 'sacrifice', some of his or her gross income for childcare credit (vouchers) with Employers for Childcare Vouchers. As this sacrifice is from taxable income, the employee pays less income tax and NICs. This difference is used to meet some of the childcare costs - this is where the savings to the employees are made. 1

2 The amount you save is dependant on how much you decide to sacrifice from your salary and the rates of income tax and NICs that you pay on your salary. You can sacrifice up to: Tax rate 20% 40% 45% Monthly amount The table below summarises the potential savings for qualifying individuals that join the scheme (based on sacrificing the maximum possible amount of salary): Tax rate Basic rate (20%) Higher rate (40%) Additional rate (455) Max amount of sacrifice Tax saving NICs saving at 12% NICs saving at 2% Monthly saving You will be given a childcare account which you can access via the Employers for Childcare Vouchers website or by telephone. You can check your balance and transfer payments to your chosen childcare provider. You can nominate a third party to access your account (they will have to answer security questions relating to the account when contacting Employers for Childcare Vouchers). You do not need to use the vouchers in the weeks that they have been acquired. On pay day you will receive your reduced monthly salary and within 24 hours of Employers for Childcare Vouchers receiving the payment, your account with them will be credited. The funds can then be used as full or part payment of your childcare costs. 5. ELIGIBILITY FOR THE SCHEME You can join the scheme provided that: you have a contract of employment with ASL (i.e. not casual or an agency worker); you pay UK tax and national insurance; you are the parent of/have parental responsibility for a child/children of 15 or younger (or 16 if the child is registered disabled); and your childcare provider is registered and has agreed to receive payment in vouchers (you are responsible for checking both these points). taking childcare vouchers does not result in the cash part of your salary falling below the national minimum wage. You are responsible for selecting the individual, organisation or institution that will provide childcare facilities. Any carer or childcare facility that is not registered with the appropriate authority, such as Ofsted/Care Inspectorate, cannot be paid with vouchers. You are required to inform us of any changes in the registration or approval status of your child carer. 2

3 6. JOINING THE SCHEME The scheme is ongoing and there is no time limit for opting in. However, the minimum period that you can enter into a salary sacrifice agreement with ASL is 12 months (see '9. Leaving the scheme' for exceptions). As the reduction in salary constitutes a change to the terms and conditions of your employment, both you and ASL must agree to vary the terms and conditions of your employment. If you decide to join the scheme you must complete the application form/agreement to vary the terms and conditions of your employment and confirm the amount you wish to sacrifice from your salary. The signed form should be sent to HR who will issue you with a copy of the application form/agreement as confirmation of the variation to your terms and conditions. Applications received by the 5th day of each month will normally be processed through payroll in that month. Applications received after that date will normally be processed in the following month. Applications will always become effective from the first day of the month. 7. PAY IMPLICATIONS You are responsible for ensuring that you will not be disadvantaged by joining the scheme. Before agreeing to a salary sacrifice and committing to receive vouchers you should consider the possible impact of the following on your individual circumstances and seek additional information and independent financial advice if necessary. Pension implications: Pension contributions will be based on your pre-sacrifice salary and will therefore not affect your ultimate pension entitlement. Pay and benefits: Pay increases, overtime rates, contractual maternity and sick pay will not be affected as they will be based on your pre-sacrifice salary. Your pre-sacrifice salary will also be used when providing information about earnings to a mortgage lender, for example. The salary reported on P60s and P45s will be your actual salary, subject to PAYE deductions. Childcare voucher salary sacrifice schemes are exempt from tax and NICs and therefore the value of the salary sacrificed in exchange for childcare vouchers is not required on the 'Total Pay' figure on the P60 and P45. State benefits: State benefits such as statutory sick pay, statutory maternity pay or statutory redundancy pay will be affected as they are based on the post-sacrifice salary. Child tax credits and working tax credits: If you are in receipt of child tax credit or working families tax credit your credits may be affected by taking these vouchers. You are advised to consider your position very carefully before reaching a decision. For further information you can phone HMRC on or the Employers for Childcare Family Benefits Advisory Service on

4 Student loan repayments: Student loan repayments may be affected by childcare voucher schemes as the repayments are activated above a set amount of earnings. If the earnings are lowered the repayment may be reduced or may not need to be made. Maternity/adoption/paternity leave: Childcare vouchers are a non-cash benefit meaning that ASL will continue to provide childcare vouchers during periods of low or no pay, unless you opt out of the scheme before the leave starts. For example, if you sacrifice 55 per week from your salary towards childcare vouchers, ASL will continue to provide this benefit during unpaid maternity/adoption/paternity leave. Or alternatively, ASL will top up your vouchers during periods where your pay does not cover the agreed amount sacrificed each month while you are on leave. In receipt of low or no pay: If, at any time other than during maternity/adoption/paternity leave, you do not receive sufficient salary to cover the amount agreed as your salary sacrifice, no deduction will be made and therefore no childcare vouchers will be made available. This could be for example if your sick pay has been exhausted. Membership of the scheme will be suspended until the salary level is greater than the level of your salary sacrifice deduction. 8. CHANGES TO SCHEME MEMBERSHIP The amount sacrificed from your salary should remain the same each month unless you experience a 'lifestyle change' (see 3. Definitions). You cannot break your childcare voucher agreement with ASL for minor reasons such as holidays or your child's short term illness. If you wish to reduce or increase your salary sacrifice amount, you should complete the 'Varying Terms and Conditions of Employment Opting In' form available from HR. Each case will be treated on an individual basis. 9. LEAVING THE SCHEME You can leave the scheme at any time owing to a lifestyle change (see 3. Definitions) by completing an opting out form available from HR. A period of inactivity for 12 months will be counted as opting out by HMRC even if you have not completed an opting out form. On leaving the scheme, you will revert to your original terms and conditions contained within your contract of employment. If you wish to rejoin the scheme you will have to wait until the start of the next scheme year, which will be the following 1 April. 10. REFUNDS A reimbursement can be made up to the value of the vouchers in your account. Neither ASL nor Employers for Childcare can reimburse vouchers already redeemed. To receive a reimbursement, you should request a reimbursement online or complete a 'Reimbursement Request Form' available from HR. The form should be returned to HR who will forward it to Employers for 4

5 Childcare Vouchers, and a refund will be issued through payroll, subject to your current rate of tax and NIC. It is advisable that you redeem any remaining vouchers or have them reimbursed through payroll. Your account can remain active so that you can continue to pay your registered childcare provider with the vouchers remaining in your account. Any refund applications must be submitted one month prior to leaving ASL as it will not be possible to process any refund applications received after that date. 11. FURTHER INFORMATION Additional information on the childcare voucher scheme can also be found on the following websites: Employers for Childcare Vouchers: Salary sacrifice: Working tax credits: EQUAL OPPORTUNITIES Abbeyfield Scotland Ltd will not discriminate in the operation of its policies and procedures on the basis of marriage & civil partnership, sex, race, disability, age, religion or belief, gender reassignment, pregnancy & maternity and sexual orientation. Abbeyfield Scotland Ltd will promote equal opportunities and comply with all current legal requirements relating to equal opportunities. Status: Approved Date of next review: February