KING’S COLLEGE HOSPITAL NHS FOUNDATION TRUST SALARY SACRIFICE CHILDCARE VOUCHERS SCHEME
It is important that you read this fact sheet before joining the scheme; particularly the section headed ‘frequently asked questions’. If you need help understanding the scheme please contact Irene Pilia: 020 3299 5380;
Introduction
King’s College Hospital NHS Foundation Trust recognises that staff have varied childcare needs for their children. Childcare Vouchers allow staff to choose where and what type of childcare they use, in a way that is financially beneficial to them.
· The Trust’s Childcare Voucher Scheme enables KCH employees to make savings on the cost of childcare by receiving part of their salary in the form of e-childcare vouchers as long as their salary, after taking the value of the childcare vouchers into account, exceeds the national minimum wage level (currently £5.93 per hour for workers aged 22 and over [2010/2011]).
· Employees who join the salary sacrifice scheme are exempt from paying tax, National Insurance and where applicable, NHS pension contributions on that part of the salary that has been converted into vouchers; it is this exemption that provides the saving.
· Childcare Vouchers are available to all KCH employees, with parental / legal guardianship responsibility for children, who are permanent employees or employees on fixed term contracts.
· Vouchers can be used to pay for registered childcare (only – see definitions below) for children up to 1st September following their 15th birthday, or, if a child is disabled, up to the 1st September following their 16th birthday.
Background
Childcare Vouchers up to a maximum value of £55 per week, or £243 per month, provided through the employer’s Salary Sacrifice Scheme are exempt from Tax and National Insurance Contributions. (But see Q5 in the Frequently Asked Questions section.) The information in this fact sheet is offered as a guide to help employees decide whether or not to join King’s College Hospital NHS Foundation Trust Childcare Vouchers Salary Sacrifice Scheme.
Legal Basis for the Scheme
Under regulation 19(1) (d) of the Social Security (Contributions) Regulations 1979, Childcare Vouchers are exempt from employee and employer National Insurance Contributions.
Registered Childcare
Ofsted inspects and registers care provided for children on two registers: the Early Years Register and the Childcare Register.
All childcarers – such as childminders, day nurseries, pre-schools and private nursery schools – providing care for children from birth to the 31 August following their fifth birthday (known as the early years age group) must register with Ofsted on the Early Years Register and deliver the Early Years Foundation Stage.
Maintained and independent schools that are directly responsible for provision for children aged from birth to the age of three, where at least one child is a pupil of the school; or who provide childcare for children in the early years age group, where no child is a pupil of the school, must also register with us.
Early Years Foundation Stage (EYFS)
The Early Years Foundation Stage is the statutory framework for the early education and care of children in the early years age group. The EYFS includes requirements for the provision of young children’s welfare, learning and development that all providers must meet, as well as good practice guidance. From September 2008 the EYFS must be delivered by all registered early years settings and all schools with children in the early years age group, whether or not they are registered on the Early Years Register. You can find out more about the EYFS on the following website: http://nationalstrategies.standards.dcsf.gov.uk/earlyyears/eyfs.
The Childcare Register
The Childcare Register has two parts: a compulsory part and a voluntary part.
Registration on the Childcare Register relies on the applicant making a declaration to confirm that they will meet the requirements of registration. Ofsted carries out a Criminal Records Bureau (CRB) check on the applicant but does not normally carry out any other checks.
We do not usually interview applicants for the Childcare Register to assess their suitability, as we do for the Early Years Register. If the applicant has lived abroad in the last five years we may require a Certificate of Good Conduct from the relevant country before we grant registration.
Compulsory part
A childcare provider must register on the compulsory part of the Childcare Register if they care for children from the 1 September following their fifth birthday up to the age of eight, unless they are not required to register. This is usually six- and seven-year-olds, but could include some five-year-olds.
Voluntary part
Some childcare providers can opt into this register if they want to provide care that does not need to be compulsorily registered with Ofsted. This includes:
home-based care in the home of the child (nannies);
activity-based settings such as sports coaching or tuition;
short-term care such as crèches;
care that is only for children aged eight to their 18th birthday.
Further details regarding the registers and registration can be found at www.OFSTED.gov.uk
Role of OFSTED
Ofsted is the Office for Standards in Education, Children’s Services and Skills and regulates and inspects childcare and children’s social care. In addition Ofsted inspects:
Schools, colleges, initial teacher education, work-based learning and skills training, adult and community learning, education and training in prisons and other secure establishments, the Children and Family Court Advisory Support Service (Cafcass). Ofsted also assesses children’s services in local areas and inspect services for looked after children, safeguarding and child protection.
Ofsted inspects against national standards and produces a report following their inspection visit. Copies of these reports can be found on the Ofsted website.
King’s College Hospital NHS Foundation Trust Disclaimer
We hereby advise and make it clear to Childcare Voucher participants that any relationship between the employee and the chosen childcare provision is a personal one. Employees must ensure that the provider of childcare is, and continues to be, registered with Ofsted. By the issuing of childcare vouchers in all cases, no warranty is given as to suitability of the childcare provider, and no liability is accepted for the acts or omissions of the childcare provider.
You, the employee, are responsible for finding a childcare provider who will accept payment via childcare vouchers.
FREQUENTLY ASKED QUESTIONS
Q1 What is Salary Sacrifice?
A. Her Majesty’s Revenue & Customs (HMRC) considers salary sacrifice arrangements effective when the contractual right to cash pay has been reduced in return for non-cash benefits, such as Childcare Vouchers.
Being in a salary sacrifice scheme amounts to an amendment to a contract of employment and therefore comes under employment law. HMRC’s involvement and interest in a salary sacrifice scheme is to ensure that the correct tax and NIC deductions are made, appropriate to the salary received.
Salary sacrifice benefits cannot be backdated.
Q2 How Will It Work In Practice?
A. You will need to sign an agreement to accept your lower salary for the duration of the time you are in the scheme and return to Payroll by the last Friday of the month prior to the month in which you wish your application to take effect. For instance, if you wish to have your childcare voucher account set up from May your application needs to reach Payroll by the last Friday in April.
Should you wish to leave the scheme at any time you must complete and return to Payroll Services a form authorising the Trust to terminate your agreement to participate in the Childcare Voucher scheme.
This form also needs to be received by Payroll on the last Friday of the month prior to the month you wish no further deductions to be made from your salary.
Pregnant staff
If you are 23 weeks or less away from your expected date of delivery (EDD) it is no longer possible to join the scheme and you must wait until you have returned to normal salary pay following your period of maternity leave before applying to join.
If you join the scheme in the weeks leading up to the 23rd week before your EDD and wish to have your Occupational Maternity Pay paid at full salary rate rather than the reduced salary sacrifice rate, for Payroll administration purposes notification to leave the scheme should reach Payroll 28 weeks before your EDD; notification received by Payroll later than this cannot be guaranteed to be actioned and could result in you receiving reduced Maternity Pay.
For pay purposes, calculations start on the Sunday of the week in which the baby is due. Counting backwards from that date gives you the date on which you will be (or were) 23 weeks away from your expected date of delivery.
Q3 How much will I save?
A. Employees who joined the childcare scheme before April 6th 2011 can have their salary reduced by the value of childcare vouchers up to a maximum of £55 per week (£243 per month) before tax, national insurance and, if applicable, pension contribution liabilities are calculated. The exact amount saved is determined by individual circumstances. i.e., how much you earn, and how much tax and NI you pay.
In return for accepting a lower gross salary, your tax, National Insurance and pension contribution liabilities – and some statutory benefits, such as Maternity Pay – are also reduced. A basic rate taxpayer will save around £962 per year if they elect to take £55 per week/ £243.00 per month worth of Childcare Vouchers per week. If you are a higher rate taxpayer you will save around £1,195 per year.
Q4. Is there a limit to how much I can receive in Childcare Vouchers?
A. As the Tax and National Insurance exemption is capped at a maximum of £55 week – £243 per month – this is the limit set by King’s College Hospital NHS Foundation Trust for participation in the Childcare Vouchers Salary Sacrifice Scheme.
Q5 Is the £55 a week/£243 per month exemption available to every employee?
A. NO. If you join the scheme on or after April 6th 2011 and you are classified as an Additional Rate taxpayer the maximum childcare voucher value you are allowed is £22 a week / £97 a month.
B. If you are classified as a Higher Rate taxpayer you are allowed a maximum £28 per week / £124 per month.
Q6 How do I join the scheme?
A. Complete the Application Form and return to Lenford Mendes in Payroll Services (details are on the form) by the last Friday of the month for action by the following pay period. (If you miss that date your order will not be processed for a further month; for example, if you wish to be in the scheme effective from your May salary the application must reach Andy by the last Friday in March.)
Q7 What will my vouchers look like?
A. The Trust operates an electronic voucher scheme, which means issuing payments to childcare providers via an online banking system. To access your Edenred [formerly known as Accor] Childcare Voucher account online you will need to have access to a computer with Internet Explorer; your account can also be accessed via the telephone.
Q8 How and when do I receive my vouchers?
When your order has been processed your online account will be credited with the voucher value as soon as the Trust approves payment of Edenred’s invoice. The value of your order is deducted from your salary on the 24th of the month:-
· Around two-three days later Edenred despatches to your home address (make sure Payroll has your up to date details) an information pack which tells you how to use your Edenred Childcare Vouchers account. Edenred will provide you with an electronic voucher membership card in order for you to initiate payment to your carer either online or via the telephone.
· Around the 5th or 6th of the next month your account is credited with the value of your order and is then available to use for paying your childcare provider.
· You will also be sent an information pack for your childcare provider – for them to register with Edenred [Accor], if they are not already registered, in order to receive payment.
Q9 Do I have to take the same amount each month?
A. Yes. However while you can’t take more than the maximum allowed depending on your taxation / joining status, you can choose to reduce your salary by as little as £10 per month – e.g., in order to build up credit to use towards the cost of holiday play schemes.
Q10 What happens if my childcare costs vary from month to month e.g. I only pay for childcare during the school holidays?
A. You should calculate the total annual amount you spend on childcare and divide by 12 to get the average monthly amount you pay on childcare. This will then be the amount of childcare vouchers you apply for each month.
Q11 What does my childcare provider/carer have to do?
A. You will be sent an information pack by Edenred prior to receiving your first voucher credit. The pack will include registration forms for your chosen carer(s). On receipt of the carer’s registration form Edenred sets up an account for your selected carer. As part of this process the carer must provide proof of their registration or approval certificate. Once they have an account they are able to receive voucher payments. (Many childcare providers are already registered with Edenred; check if yours has an Edenred account number.)