Employers told to issue childcare voucher reminder

Employers should remind working parents that they can reduce contributions into the childcare voucher scheme while they work from home. 

Since the start of the COVID-19 pandemic, many employees have been working from home and have used less paid childcare due to lockdown restrictions forcing nurseries and after or before-schools clubs to close.

Subsequently, HMRC has said that existing users of the childcare voucher scheme are racking up unspent childcare vouchers in their voucher accounts.

The childcare voucher scheme closed to new applicants in October 2018, but many parents continue to contribute up to £55-a-week via salary sacrifice.

In its bi-monthly employer bulletin, HMRC said:

“Can you remind your employees that they can reduce their contribution by speaking with you and agreeing to a new lower amount (both the employer and employee must consent)?

“Contributions can be increased again later when required and varying the amount will not affect eligibility to the scheme, provided that the normal conditions of the scheme are met.”

If employees still receive childcare vouchers through salary sacrifice, they might wish to check if they are better off financially on tax-free childcare.

For every £8 paid into a tax-free childcare account, the Government contributes £2, up to £2,000 per child (under 12 years old) per year, and £4,000 for disabled children under 17.

Get in touch to discuss tax-free childcare.