#TaxFreeChildcareUpdate

• New Scheme to help parents with the cost of registered childcare. What is Tax-Free Childcare? • New Scheme to help parents with the cost of registered childcare. • Available from 21 April 2017, initially for households with children under the age of 4, or children with a disability.

What is Tax-Free Childcare?

20% of a working family’s childcare costs. What is Tax-Free Childcare? 20% of a working family’s childcare costs. Up to £2,000 per child per year, or £4,000 for a child with a disability, from the Government. Max tax-free childcare top up is £500 per quarter per child.

Who is eligible to join the Tax-Free Childcare scheme? Both parents must be in employment, working over 16 hours a week and earning between £120 per week and £100,000 per year. Self-employed parents will also be eligible to join. The scheme will be available to parents of children up to the age of 12 (or age 17 for children with disabilities).

How will Tax-Free Childcare work in practice? Parents register for an online childcare account (www.childcarechoices.gov) For every £8 paid into the account, the Government will pay in £2, up to a maximum of £2,000 per year per child (i.e. you would need to put in £8,000 for the Government to top up your account with £2,000). Payments can be made directly to the childcare provider through the online account. Parents will need to open an account for each child.

Tax-Free Childcare and Childcare Providers To accept payment though Tax-Free Childcare, childcare providers must register with HMRC. Payments will be made directly into the providers bank account. Must be a registered childcare.

How does Tax-Free Childcare compare to Childcare Vouchers? £243 deducted from parent’s salary and added to Childcare Voucher account. Tax and NIC free Monthly savings £77.76 per parent Maximum annual saving £1,866

Payment via Bacs to Childcare provider Childcare Vouchers £243 automatically added to Childcare Voucher Account Payment via Bacs to Childcare provider Parent gets paid Parent saves up to £77 per month through tax and NIC.

How does Tax-Free Childcare compare to Childcare Vouchers? Difference in savings: Childcare Voucher Savings are due to lack of Tax and NIC (32% of the sacrificed amount) Tax Free Childcare savings are 20% of overall childcare bill.

Tax-Free Childcare Payment via Bacs to Childcare provider Parent adds 80% of total childcare bill to online account Parent gets paid Government adds 20%

Tax-Free Childcare Points to Consider 1. Not everyone will get £2,000! 2. Tax-Free Childcare (TFC) cannot be claimed with either Childcare Vouchers or Tax-Credits. 3. The Childcare Voucher scheme (CCV) will close to new entrants in April 2018. 4. If you move from the CCV to TFC you will be unable to get back into CCV.

#TaxFreeChildcareUpdate As you have heard there are BIG CHANGES coming in which will affect parental choice when considering financial help with registered childcare costs. The unfortunate knock on effect of more choice can be more confusion for parents - what is the best route to take in my circumstance? For a lot of parents trying to decide what is the best form of help is not an easy task as illustrated here…………….. (NEXT SLIDE) #TaxFreeChildcareUpdate

Example 1 Mark and Sally pay £450 for childcare each month for their daughter Liz. £450 per month

Their joint annual saving is £1,728 Example 1 Childcare Vouchers £450 per month £243 £207 Their joint saving is £144 per month Their joint annual saving is £1,728 Tax & NIC free

Their joint annual saving is £1,080 Example 1 Tax-Free Childcare £450 per month £360 Government adds £90 Their joint saving is £90 per month Their joint annual saving is £1,080 80% of childcare bill 20% top up

Example 1 Childcare Vouchers Their joint annual saving is £1,728 Tax-Free Childcare Their joint annual saving is £1,080 Mark and Sally are better off using the Childcare Voucher Scheme by £648 per year

Example 2 Peter and Jan have two children, Ella, who is in full-time childcare, and Jack, who attends an afterschool club. The childcare bill for Ella is £168 per week (£728 per month), for Jack it is £90 per week (£390 per month). Their total monthly childcare bill is £1,118. £1,118 per month

Their joint annual saving is £1,866 Example 2 Childcare Vouchers £1,118 per month £243 Their joint saving is £155.52 per month Their joint annual saving is £1,866 Tax & NIC free

Their joint annual saving is £2,683 Example 2 Tax-Free Childcare £1,118 per month £582.40 Their joint saving is £223.60 per month Their joint annual saving is £2,683 80% of childcare bill £312 £145.60 £78

Example 2 Childcare Vouchers Their joint annual saving is £1,866 Tax-Free Childcare Their joint annual saving is £2,683 Peter and Jan are better off using the Tax-Free Childcare Scheme by £817 per year

Example 3 Alex and Wilma have twin girls, Deborah and Joanne. Wilma has recently returned to full time work after maternity leave. The girls are in full-time childcare costing £175 per week each. The total childcare bill is £350 per week. Their total monthly childcare bill is £1,517. £1,517 per month

Their joint annual saving is £1,866 Example 3 Childcare Vouchers £1,517 per month £243 Their joint saving is £155.52 per month Their joint annual saving is £1,866 Tax & NIC free

Their joint annual saving is £3,640 Example 3 Tax-Free Childcare £1,517 per month £606.67 Their joint saving is £303.34 per month Their joint annual saving is £3,640 80% of childcare bill £151.67

Example 3 Childcare Vouchers Their joint annual saving is £1,866 Tax-Free Childcare Their joint annual saving is £3,640 Alex and Wilma may be better off using the Tax-Free Childcare Scheme by £1,774 per year

Example 3 Due to their income and household circumstances, Alex and Wilma are also entitled to claim Tax Credits. When they are claiming Childcare Vouchers of £243 each, £486 total per month, they report the remaining £1,031 to HMRC as part of their Tax Credits claim. £1,517 per month

Their joint annual Childcare Voucher saving is £1,866 Example 3 Childcare Vouchers and Tax Credits £486 per month Their joint annual Childcare Voucher saving is £1,866 Tax & NIC free Their annual Tax Credit Award is £7,152 £1,031 per month Reported as part of Tax Credit Claim

Example 3 Childcare Vouchers Their joint annual saving is £1,866 plus Tax Credits Their annual entitlement is £7,152 Tax-Free Childcare Their joint annual saving is £3,640 Alex and Wilma will be better off using a combination of Childcare Vouchers and Tax Credits by £5,378 per year

Tax-Free Childcare Points to Consider 1. Not everyone will get £2,000! 2. Tax-Free Childcare cannot be claimed with either Childcare Vouchers or Tax-Credits. 3. The Childcare Voucher scheme will close to new entrants in April 2018. 4. If you move from the CCV to TFC you will be unable to get back into CCV.

Support available to Employers and Employees Access to Freephone Helpline Workplace Posters Access to online Factsheets Employee information sessions So what support are we offering to you as HR or Payroll Professionals For you we offer our support to ensure that your employees are fully informed about all the options that are available to them Ensuring that they know exactly how to apply for Childcare Vouchers, who to contact within the organisation, how much they will save and therefore what is the most beneficial for them

Support available to Employers and Employees Employee support: Employer Roadshows Employee group information session Employee Advice Clinics Employee information: Employer Roadshows – where our advisors can come and set up in a canteen or other suitable location – mainly for larger organisations where employees would have breaks or shifts at different times throughout the day Employee group information session – smaller organisations where you can get together a group of interested employees and we can come along to give a presentation to those employees on site Employee Advice Clinics - Appointment based – face to face appointments where employees need further personalised advice regarding their household circumstances – perhaps as a follow on from a previous session Advisor on site - Employees would make bookings via HR/Personnel - have all their household details and we would provide personalised benefits check covering benefits and options for help with childcare costs EXPRESSION OF INTEREST FORM within the pack – and Advisor will follow up - what is best for your organisation and look at dates.

#TaxFreeChildcareUpdate Myself and Family Benefits Advisors are here today to give further information on anything I have covered Our Childcare Voucher team are also here to answer any questions you may have that are specific to your scheme or organization The staff will be at the stands in the lobby area at the end of this time, please have a chat with them. We will now take some time to answer questions. #TaxFreeChildcareUpdate