Make Sure Your Childcare Voucher Scheme Remains Valid

Employee benefits provider, Busy Bees Benefits is helping its customers to get ready for the new financial year and meet HMRC rules by providing them with an updated, electronic Basic Earnings Assessment (BEA) to complete. Failure to confirm the BEA for each member of staff can result in the employer’s scheme being invalidated and there will be no entitlement to tax relief.

The rationale of the change two years ago was that income tax savings would be the same across all tax bands, and therefore fairer. The amount of vouchers each employee can exchange therefore depends on their tax band. Parents who joined the Childcare Voucher scheme after April 2011 can only exchange the maximum amount of £243 per month or £55 per week if they are Basic Rate Taxpayers.

The employer is required to confirm whether the individual employee is a basic, higher or additional rate tax payer and if their Childcare Voucher order is in line with the amount they are able to claim. Busy Bees Benefits responded swiftly to HMRC’s changes by developing its operating system to ask employees to complete an electronic basic earnings assessment. Employees are asked to input their tax code, gross income and details of any other salary sacrifice schemes they use. The system instantly assesses whether the individual is a basic, higher or additional rate tax payer and ensures the correct amount of Childcare Vouchers are requested. The employer receives an email which asks them to confirm the assessment or provide the necessary amendments. The system also provides an online storage system so these details can be readily retrieved when required. All employers are obliged to prove that they check Basic Earnings Assessments annually.

The other check that employers need to make is to ensure that no employee breaches National Minimum Wage levels. Busy Bees Benefits has again used its innovative system to deliver full compliance.

A leading European IT company said of the system “Since joining Busy Bees we’ve made significant cost savings, and the online account management means that time savings have been made for our HR and Payroll colleagues.”

Protected Rights

Employees who were registered on a Childcare Voucher scheme before 6th April 2011 and have taken at least one deduction for Childcare Vouchers in each tax year since then, can still order the full allowance of £243 per month, whatever their earnings. Changing voucher provider will not affect employees’ protected rights. Changing employer, other than TUPE transfers, will mean they lose their rights. Busy Bees Benefits informs employees with protected rights if they have not ordered Childcare Vouchers during that tax year to ensure they do not lose their full entitlement.

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