News! Government roll out of tax-free childcare scheme started on 21 April 2017
Working parents with children under 4 on 31 August 2017 and parents of disabled children under 17 can start applying for two new government childcare schemes launching this year - Tax Free Childcare that starts immediately, and 30 hours free childcare for 2-3 year olds which starts in September.
For parents across the UK, Tax Free Childcare will cut childcare costs by up to £2,000 a year for each child under 12 years old, or £4,000 a year for disabled children under 17 years old. The programme will be rolled out through the year, with all eligible parents able to receive it by the end of 2017.
From September, working parents of 3 and 4 year olds living in England will also be eligible for the new 30 hours free childcare offer, worth around £5,000 per child. Parents will only need to make a single application for both schemes when their children become eligible.
More information is available from the websites below or Caroline Williamson, Payroll, extension 43088.
Working parents can continue to apply for care-4, the University's existing Childcare voucher scheme, until 28 April 2018 at which time the government will close the scheme for new joiners. The care-4 scheme allows you to save on the cost of childcare for children under 16. Care-4 is a salary sacrifice scheme, whereby you set aside ('sacrifice') part of your gross (pre-tax) salary each month to pay for childcare. Your tax and National Insurance is then calculated based on your remaining salary, which means you pay less and save money. Employees who are parents and wish to remain in the University of Birmingham's care-4, supported Childcare vouchers scheme, will be able to, while the University of Birmingham continues to offer the voucher scheme.
How it works
Benefits for you
Joining the scheme
Frequently asked questions
Sources of further information
How it works
You join for a period of 12 months at a time.
From 6 April 2011, the amount of tax you can save will be limited to the equivalent of basic rate (20%), even if you pay tax at a higher rate. As a result everyone gets the same level of tax exemption (around £11 per week) but the maximum value of tax-exempt vouchers you can receive varies depending on your tax bracket.
Payroll will carry out an annual assessment every April to determine which level of exempt income you will be able to receive during that tax year. For more information see section 3 of the scheme rules (PDF - 39KB).
If you joined the scheme on or before 5 April 2011, the new rules regarding maximum values do not apply.
It's up to you how much of your monthly salary you set aside for childcare vouchers, up to your maximum value; choose carefully as this will be fixed for 12 months (see FAQ below for more information).
The money you choose to set aside is paid by the University into your personal, secure, care-4 account. You pay your carer from this account and can authorise payments online or over the phone, on either an ad hoc or scheduled basis.
You can select your own child carer, as long as they are a registered or approved carer. Spouses or partners, blood relatives and au pairs are not eligible to be paid through the scheme.
For full details see the scheme rules (PDF - 39KB)
Benefits for you
Find out how much you could save by using the savings calculator on www.care-4.co.uk
Confidential childcare helpline
The helpline is available 24 hours a day, 365 days per year and provides assistance and advice on childcare arrangements and parental support on every aspect of your child’s wellbeing. The helpline also has fully qualified clinical staff on hand to offer advice on child health issues.
You will also have access to a quality emergency childcare website.
Help finding child minders
You will have free access to the Emergency Childcare website, a secure site which helps you find registered childminders in your local area who are members of the National Childminders Association.
Joining the scheme
To join the scheme you need to register with care-4. You can do this on-line at www.care-4.co.uk, or by phoning 0844 800 1444 from 9am to 6pm Monday to Friday, or 9am to 5pm on Saturdays (national rate call charges apply).
When you register you must have the following information to hand:
- The University of Birmingham Unique Identifier - UNIB4
- Your full name and address (including postcode)
- Your payroll number
- Full name and date of birth of your children whose care is to be paid for through the scheme
- Full name and address (including postcode) and telephone number of your carer(s)
- Your annual gross salary
- The annual amount of your salary you wish to set aside for childcare
After you’ve joined
Care-4 will send you a welcome pack containing:
- confirmation of your information
- simple instructions on how to use your care-4 account
- a personalised care-4 card, account number and codes to use when authorising payments to carers
- a form for you to complete confirming that you agree to sacrifice a portion of your salary to pay for childcare. You must sign and return this form to care-4 by the 8th day of the month in order to start participating in the scheme that same month.
You should let your carer(s) know that you are participating in the care-4 scheme, and that care-4 will contact them.
care-4 will send your carer(s) a welcome pack, which will include a personalised care-4 card and account number, enabling them to check the status of payments to their account. care-4 will also ask your carer(s) for their bank account details and confirmation that they are an approved or registered carer.
1. Can I change the amount of money that I put aside to pay for childcare if my childcare costs change?
No. You can only normally change the amount you set aside at the end of each 12-month period. There is some flexibility to change it in the event of a significant lifestyle change such as moving house, or the birth of another child.
The maximum amount you can set aside through salary sacrifice is regulated and will be assessed annually by payroll.
2. Can you explain more about the annual assessment carried out by Payroll?
The annual basic earnings assessment is necessary to ensure compliance with the change in legislation. The assessment will be carried out when you first apply to join the scheme, and at the beginning of each tax year (every April).
Payroll will only carry out an earnings assessment once a year, which will fix the level of exempt income (for childcare vouchers) that you are entitled to for that tax year until the following April.
If your pay changes or you change your hours during the course of the year, the amount of exempt income you will be entitled to receive in relation to care-4 may change from the start of the following tax year. This could put you in a different tax band for the voucher amount, altering your voucher amount: see the table in the scheme rules (PDF - 39KB).
Example: if you joined the scheme after April 2015 paying tax at 40%, you were entitled to up to £124 per month in tax-exempt vouchers. If you reduce your hours such that you are paying tax at 20%, your tax-exempt voucher entitlement will change, with effect from the following tax year, to up to £243 per month.
3. Can I leave the scheme at any time?
No. You join the scheme a fixed period of 12 months and you may only cancel at the end of a 12-month period. It may be possible to cancel membership during the 12-month period in the event of a significant lifestyle change such as moving house, or the birth of another child.
4. Will I get a refund if I do not use all the money I set aside for childcare for the year?
No. Any money left at the end of your 12 months on the scheme will simply be carried forward to the following year’s scheme, so you should carefully calculate the amount of childcare provision you need.
When you leave the care-4 scheme the money remains in the employee's care-4 account for 18 months. If the credit is not used up after 18 months, the money is dispersed to charity.
5. What happens if the money I set aside does not cover my childcare costs?
If your salary sacrifice does not cover your full childcare costs, you will need to pay your carer the outstanding balance by another payment method.
6. Can I change my nominated childcare provider(s)?
Yes, you can register new child carers throughout the year. To avoid delays in making payments to new child carers, please register your new carers as far in advance as possible.
7. Will there be any effect on my state benefits?
Participating in a salary sacrifice scheme, such as care-4, may impact upon your entitlement to certain state benefits. For example, if you are on Working Tax Credits, this scheme will reduce the amount you pay tax on, and so may lead to an increase in your Working Tax Credits. However, if you receive the childcare element of Working Tax Credits, this may reduce.
If you are in any doubt, please contact your local tax office on 0845 300 3900 or visit taxcredits.hmrc.gov.uk/Qualify/DIQHousehold.aspx
8. My child is at the Elms Day Nursery and I am already getting a benefit through the Working Tax Credit Scheme: should I switch to care-4 instead?
The HMRC has a guide to help you check whether you would be better off sticking with Working Tax Credits or switching to the care-4 scheme:
For further information...
For particular information about your tax band and your circumstances, please contact Caroline Williamson in Payroll.
Care-4 scheme rules (PDF - 39KB)
Parents and carers' resources (information on maternity, paternity/partner and adoption leave, shared parental leave and flexible working)
Nurseries (on external University website)
Family leave guidance