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Chris Leslie
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The Government’s National Childcare Strategies for England, Wales and Scotland encourage employers to assist those of their employees who have to meet childcare costs. As explained in the document “Paying for childcare – Help from your employer”, produced by the Department for Education and Skills, there are some good reasons why more and more employers are looking at their employees’ childcare needs and trying to find ways to help them.
The RSM Bentley Jennison Childcare Benefits Scheme (“the Scheme”) takes advantage of this statutory exemption which is contained at s318A, Income Tax (Earnings and Pensions) Act 2003 and which relates to “employer-provided childcare”.
The Scheme relies on two basic principles. First, an employee who wishes to participate in the Scheme is required to enter into a formal agreement with the employer whereby he/she will sacrifice up to £55 per week of gross salary. By not having to pay tax or NICs on the amount sacrificed, the employee saves between £17 and £22 per week.
In return (and simultaneously), the employer enters into a contract with the respective childcare provider under which it (the employer) becomes responsible for meeting up to the first £55 of the employee’s weekly childcare costs. In this way, the employer is seen to be providing the employee with the (tax-exempt) benefit of childcare for the purposes of the income tax legislation.
We provide all of the documentation needed to establish the contracts between the employer and the childcare providers.
Some HR flags need to be carefully considered and that is why these schemes require implementation by experienced advisers to avoid NMW, SSP, pensions, and other isses.
Hope this helps.
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