Employer Childcare Vouchers F.A.Q.
Who are Rascals?
Rascals Vouchers Limited is a Childcare Voucher provider. We are run by a team with over 10 years experience. We know what works and what doesn't and designed our scheme and company to be the best.
We are particular specialists in the provision of electronic childcare voucher schemes to smaller employers. We demand no minimum numbers and our costs are low enough to make the scheme attractive to smaller employers as well as those larger ones.
What is the Childcare Voucher Scheme?
Childcare vouchers are part of a Government Scheme to help working parents with the costs of childcare.
How does the Government help?
From April 2006 the Government offers tax and NI savings on up to £55 per week of childcare vouchers for every working parent. Your employees can elect to receive childcare vouchers instead of the equivalent amount of cash salary. The voucher part of their salary will be tax and NI free.
How much do the savings add up to?
A basic rate taxpayer will save tax and NI totaling up to £904 per year and a higher rate taxpayer can save up to £933 per year. (Go to the savings calculator in the main Employee section to calculate savings).
How much are the savings for employers?
Employers save the employer NI of up to 12% on the value of the vouchers. For every employee who takes the maximum of £243 per month in voucher benefit the employer will save £402 per year. Even after paying Rascals to administer the scheme you will make a substantial saving.
Why Choose Rascals?
- Experts in this market
- Easy to use online service with minimal administrative impact on your company
- Full support for promoting your scheme
- Dedicated childcare voucher scheme
- Independent of nurseries or other carers so completely impartial
- Low fees to enable all employers to benefit from the scheme
- Fast payment to Carers with full and clear remittance advice notes
- Helplines for clients, parents and carers
What is Salary Sacrifice?
Most schemes are set up as a salary sacrifice.
Salary sacrifice is when an employee gives up the right to a part of their cash pay before it is treated for tax and NI purposes.
By receiving Childcare Vouchers instead of cash pay, an employee makes tax and NI savings on the voucher part of their pay. An employee must sign a Variation to Contract agreeing to receive less cash pay and a benefit (a Childcare Voucher).
More advice can be found at www.hmrc.gov.uk/specialist/salary_sacrifice.pdf
Amendment to Employment Contract
During the period of the contract, usually at least a year, an employee is not allowed to withdraw from the agreement unless he/she experiences a lifestyle event such as a death, divorce, new baby or a child starting school.
Notifying the Inland Revenue
The Inland Revenue will not approve a scheme before it is introduced. We recommend that you advise the Inland Revenue about your scheme and we will give you a suitable letter to do this.
Salary sacrifice and non-cash benefits during maternity and adoption leave
When an employee is on statutory maternity or adoption leave, all of the terms and conditions of their employment contract continue to apply, other than those relating to wages or salary.
This applies to all non-cash benefits in the contract, including any that form part of a salary sacrifice arrangement. You must continue to provide these benefits in the same way as if the employee was still at work.
For example, if you agree a salary sacrifice arrangement that involves an employee losing £50 per week of their salary in return for £50 of vouchers, you will have to continue to provide those vouchers throughout any statutory maternity or adoption leave that the employee takes.
You cannot reduce the amount of any statutory payments due to the employee to recover the cost of providing any non-cash benefits to them while they are on maternity or adoption leave.
Please note that these provisions apply to childcare vouchers in exactly the same way as to any other non-cash benefits.
For the full guidance from HMRC please follow this link:-
Criteria for a successful Childcare Voucher Scheme
- You must offer the Scheme to all your employees.
- You must ensure employees sign an Amendment to Contract.
- You must ensure that voucher benefit is only used to pay for Registered/Approved Childcare (Rascals take care of this).
Things to think about before implementing a Scheme
Company pensions - you may want pension contributions to be based on cash pay plus the value of the childcare voucher benefit so that there is no impact on an employee's contribution level. You will need your pension trustees' approval for this. (This is what most employers do by the way).
National Minimum Wage (NMW) - an employer cannot pay below this level by law. Employees cannot join a salary sacrifice scheme if it results in their pay falling below the NMW.
Tax Credits - Not all employees will benefit from entering a salary sacrifice scheme. It is wise to direct employees to the Tax Credits helpline to determine whether they will save money or not with Childcare Vouchers.
Your step by step guide on how to get it up and running...
- Register with Rascals (it's free) online - click here
- Communicate the Scheme to all your employees with our help and support.
- Make the necessary changes in your payroll.
We'll do the rest...
How does the scheme work for Childcare Providers?
The carers are fundamentally important to your employees' daily lives and, of course, look after their most precious asset.
At Rascals we realise this and work hard at looking after them properly.
With our experience of the industry we know what it is that carers like and don't like and we have set Rascals up to make sure the carers get what they want, when they want it.
- “Setting up a Rascals account for the firm was easy. We found the Rascals team very helpful and they guided us through the process step by step, giving us confidence that everything had been done correctly.”
Samm, Property Lawyers
- “Thanks for all your help over the past year – it has been really appreciated. I will definitely recommend your services.”
Liz, Risk Management Consultancy