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Parents may lose out on tax break Parents may lose out on tax break
(about 3 hours later)
The government should intervene to make sure working parents do not lose out on tax breaks towards the cost of childcare, a leading charity has said.The government should intervene to make sure working parents do not lose out on tax breaks towards the cost of childcare, a leading charity has said.
The Daycare Trust says businesses are being advised by the British Chambers of Commerce (BCC) to withdraw from the government's childcare vouchers scheme.The Daycare Trust says businesses are being advised by the British Chambers of Commerce (BCC) to withdraw from the government's childcare vouchers scheme.
The scheme involves sacrificing part of your salary in exchange for "vouchers".The scheme involves sacrificing part of your salary in exchange for "vouchers".
But the BCC says employers may have to pay for the notional vouchers when women go on maternity leave. But the BCC says an employer could have to pay for the notional vouchers if a woman takes unpaid maternity leave.
About 300,000 parents take part in the scheme, which was introduced in 2005.About 300,000 parents take part in the scheme, which was introduced in 2005.
It is estimated that just under one-in-five employers now offer it. It is estimated that just under one-in-five employers now offers it.
Voucher bonusesVoucher bonuses
Employers are naturally risk averse and we would not recommend now that they use the vouchers in case they did become liable for the cost Abigail Morris, British Chambers of CommerceEmployers are naturally risk averse and we would not recommend now that they use the vouchers in case they did become liable for the cost Abigail Morris, British Chambers of Commerce
The "vouchers" are handled in an electronic account by a third party provider and are then paid to any allocated registered child carer from au pairs to nurseries.The "vouchers" are handled in an electronic account by a third party provider and are then paid to any allocated registered child carer from au pairs to nurseries.
Mothers and fathers can both commit up to £243 of their salary each month.Mothers and fathers can both commit up to £243 of their salary each month.
For employers there are also bonuses.For employers there are also bonuses.
As well as providing an added incentive for people to work for them, they do not have to pay their national insurance contribution on the money employees allocate to the scheme.As well as providing an added incentive for people to work for them, they do not have to pay their national insurance contribution on the money employees allocate to the scheme.
They do pay an administration fee to the voucher providers but this can be as little as 2.5%.They do pay an administration fee to the voucher providers but this can be as little as 2.5%.
Employer concernsEmployer concerns
But since last October some companies have got cold feet.But since last October some companies have got cold feet.
An equal opportunities ruling from Europe has led to the implication that if a woman who subscribes to the childcare vouchers scheme goes on maternity leave without a salary, she should have her monthly payments kept up for her by her employer until she returns to work.An equal opportunities ruling from Europe has led to the implication that if a woman who subscribes to the childcare vouchers scheme goes on maternity leave without a salary, she should have her monthly payments kept up for her by her employer until she returns to work.
What we need the government to do is to set out some clear guidelines so everyone knows where they stand Alison Garnham, the Daycare TrustWhat we need the government to do is to set out some clear guidelines so everyone knows where they stand Alison Garnham, the Daycare Trust
The potential cost has worried employers.The potential cost has worried employers.
The British Chambers of Commerce says its members have been contacting it for advice.The British Chambers of Commerce says its members have been contacting it for advice.
And as the ruling has not been tested in court yet, it is advising them to withdraw from the scheme.And as the ruling has not been tested in court yet, it is advising them to withdraw from the scheme.
"Before the change in the law in October we would have told our members to go out there and offer the childcare voucher scheme as a benefit to their employees," explains Abigail Morris, policy advisor at the BCC."Before the change in the law in October we would have told our members to go out there and offer the childcare voucher scheme as a benefit to their employees," explains Abigail Morris, policy advisor at the BCC.
"But with the change in the law employers can now be liable in certain circumstances for the cost of the vouchers."But with the change in the law employers can now be liable in certain circumstances for the cost of the vouchers.
"Employers are naturally risk averse and we would not recommend now that they use the vouchers in case they did become liable for the cost.""Employers are naturally risk averse and we would not recommend now that they use the vouchers in case they did become liable for the cost."
Seeking clarificationSeeking clarification
Parental support groups are concerned by the reaction of businesses.Parental support groups are concerned by the reaction of businesses.
The national childcare charity, the Daycare Trust, says working families have been asking them what impact the ruling might have on them. It wants the government to make the situation clearer.The national childcare charity, the Daycare Trust, says working families have been asking them what impact the ruling might have on them. It wants the government to make the situation clearer.
"We really don't want to see a mass exodus from the scheme," says Alison Garnham, joint chief executive of the Daycare Trust."We really don't want to see a mass exodus from the scheme," says Alison Garnham, joint chief executive of the Daycare Trust.
"It's a very important scheme. What we need the government to do is to set out some clear guidelines so everyone knows where they stand."It's a very important scheme. What we need the government to do is to set out some clear guidelines so everyone knows where they stand.
"If the problems persist, though, it might be that they need to step in and give financial assistance to employers.""If the problems persist, though, it might be that they need to step in and give financial assistance to employers."
Although the ruling was seven months ago its impact on childcare vouchers was not highly publicised and only now are the first wave of women who could be affected taking maternity leave.Although the ruling was seven months ago its impact on childcare vouchers was not highly publicised and only now are the first wave of women who could be affected taking maternity leave.
The Department for Business, Enterprise and Regulatory Reform (BERR) says it is looking into the matter and hopes to make a clarification within the next few months.The Department for Business, Enterprise and Regulatory Reform (BERR) says it is looking into the matter and hopes to make a clarification within the next few months.
In the meantime uptake from employers is still increasing according to the companies who provide the vouchers.In the meantime uptake from employers is still increasing according to the companies who provide the vouchers.
The concern for working parents is that this figure will get lower rather than higher, unless the matter of payments during maternity leave is cleared up soon.The concern for working parents is that this figure will get lower rather than higher, unless the matter of payments during maternity leave is cleared up soon.