Childcare vouchers At Active Learning, we try to accept all forms of childcare vouchers, in order to provide parents with flexible payment options. Each childcare voucher company pays at different times, with differing methods of payment and reconciles and communicates customer accounts in a variety of different ways. It is impossible for us therefore to know the correct amount to take from your account in direct debit terms in advance. To make this process as seamless as possible for both you the parent and Active Learning, and to allow us to continue to accept all forms of childcare vouchers, we have implemented a payment scheme that allows us to invoice you accurately each month.

For your child’s first month with Active Learning you will have to pay 100% of fees in advance. Any childcare vouchers received during that calendar month will be credited to your account, and deducted from the second month’s invoice (provided they are received before the 15th of the month, our invoice date). Thereafter all voucher amounts will be credited to the subsequent month’s invoice for the period your child is with Active Learning.

The following documents how the largest Voucher company operates, ‘Childcare Vouchers’. Most other schemes are similar in principle but will differ slightly as to how payments work. Some offer paper vouchers only and others have electronic schemes.

Since their launch in 1989, Childcare Vouchers have proved to be one of the most popular forms of childcare assistance that a UK employer can provide.

The Government has introduced one of Europe’s most favourable tax and National Insurance exemptions for Childcare Vouchers and this £55 per week family-friendly initiative provides significant financial benefits for both working parents and employers through a salary sacrifice initiative.

All nurseries which are Ofsted registered are eligible to receive these vouchers so you can enquire with us as to whether your employer is already registered with us and if not, how to join them to the scheme.

How does the scheme work? Parents can choose to take Childcare Vouchers up to the value of £2,916 p.a. per person as part of a remuneration package, as long as the cash salary is not reduced below the National Minimum Wage by choosing to take part of your salary in Childcare Vouchers. This means that if you elect to accept Childcare Vouchers as a portion of your salary, you will not have to pay National Insurance Contributions (NIC) or Tax on up to £55 per week on the vouchers.
From April 2006 you save Tax and NI on Childcare Vouchers up to £55.00 per week maximum. Therefore, if you earn less than £33,540 you will save 33%, and those earning above £33,540 will save 41% on a total of £2,916 per annum.

• Earners below £33,540 paying 9.4% NI - Save £916.00
• Earners below £33,540 paying 11% NI - Save £962.00
• Earners above £33,540 could save up to £1,195.00 depending on their tax band and salary level.

Paper vouchers can be used to pay your child care provider – just like cash, but worth more due to their Tax and NI savings. You will be sent your vouchers to your home address on the dates decided by your employer – you can then pay us by simply passing the vouchers to us. The payment to Active Learning – for the full amount shown on the vouchers – will be made directly into their bank account by Accor Services. However, there is sometimes a time difference in when this payment occurs and therefore at Active Learning, the benefit to you of your vouchers is usually one month in arrears and your first fees will be deducted as normal for the first month. When Active Learning receives payment from Accor, we will then credit this amount against your fees for the following month.

Electronic Childcare Vouchers represent an alternative to traditional paper vouchers in a secure internet and telephone service – no paper vouchers, just an easy-to-use electronic account that helps you manage the payment of your account with the nursery. You will be sent a membership card with your account details and a letter explaining how to proceed. This will allow you to access your account 24 hours a day, 7 days a week. Your account is credited with the value of your benefits on the dates decided by your employer – you then initiate payments to Active Learning, using their own unique account number.

What forms of support will not be covered by the tax and NICs exemptions? The exemption will not extend to:

• Cash payments to an employee to help with their childcare
  costs.
• Paying an employee's childcare bills on their behalf.
• Payment of school fees.
• The provision of childcare or childcare vouchers if the qualifying conditions are not met.

Could receiving childcare or Childcare Vouchers affect my entitlement to tax credits? Yes. Childcare costs that are met through vouchers cannot be taken into account for tax credit purposes. If there is a reduction in cash pay this may affect entitlement.
Accor Services offers all clients free access to the online tax credit Estimator, a unique user-friendly tool which helps users calculate the implications of Childcare Vouchers on Working Tax Credit and Child Tax Credit.

Further advice can be obtained by contacting the Tax Credits helpline on 0845 300 3900 (Great Britain) or 0845 603 2000 (Northern Ireland).

Does having a deduction from my salary for Childcare Vouchers affect my tax or my pension? If you have a State Pension (contracted into SERPS), by reducing your salary and taking Childcare Vouchers, you are reducing the amount of NIC’s paid, which means that your State Pension Contributions are less. However, because it is unlikely that you will be using Childcare Vouchers in this way for more than 4 or 5 years, the impact on the State Pension payouts when you retire will be extremely minimal. If you have a Private or Company Pension, it is at the discretion of the Trustees of the pension provider as to whether they will include the value of the Childcare Vouchers as “pensionable” salary – in most cases this is not a problem, so your pension will not be adversely affected. Please
contact your HR department for further information.

If I have not used up my vouchers by the end of the month, what do I do? All paper vouchers are valid for 1 year. If you have some left over, contact your employer. Electronic vouchers do not have any expiry date.

What is a salary sacrifice? HM Revenue and Customs states that salary sacrifice arrangements are effective when the contractual right to cash pay has been reduced. For that to happen two conditions have to be met:

• The potential future cash pay must be given up before it is treated as received for tax or NIC purposes; and
• The true construction of the revised contractual arrangements between employer and employee must be that the employee is entitled to lower cash remuneration and a benefit.

In practice that means:

• The employer pays directly towards a childcare service; it could be an in-house provision, a Childcare Voucher or a subsidy to a provider. The cash salary paid to the parent is reduced by the amount the employer pays towards childcare. This is the sacrifice.
• There is an amendment to the employee’s contract that makes it clear that the parent is entitled to a lower salary and the employer will pay an equivalent amount towards childcare support. The contract variation cannot be backdated.
• The employee does not retain the right to return to the previous level of salary within the terms of the contract.
• The amendment can be for a specific period, example one year, or until the child no longer uses the provision or a major life change.

Remember that liability for the correct deduction of tax and National Insurance Contributions (NICs) resides with the employer. It will be in the employer’s interest to seek advice from an employment law expert or legal adviser.

Individuals must have a choice as to whether they take a salary sacrifice. In order to make that choice, an individual should be provided with information about the implications of taking a salary sacrifice, which indicates that depending on their level of income and the duration of the salary sacrifice, it may affect their entitlement to state benefits and tax credits.

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Does the saving only come with salary sacrifice? No. An employee can be on a Salary Sacrifice or Salary Plus scheme. Both attract the exemptions and it is possible to take part of the exemption as salary plus and the rest as salary sacrifice.

Salary sacrifice is where the employee gives up salary in exchange for the employer paying towards a place or a voucher in order to benefit from the exemptions available for employer sponsored childcare.

Salary plus is where the employer pays the member of staff an amount over and above their salary towards childcare in the form of a subsidised place or a Childcare Voucher.

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Nursery education grant What is the Nursery Education Grant ?
Nursery Education Grant has been introduced by the Government to provide a free early education place (at least part-time) for many 3 year olds and all 4 year olds. If you have a 3 or 4 year old child you may be eligible for this.

If you are sending your child to Active Learning, a grant may be available to meet the cost of part-time education.

How much is the grant? The amount of grant available per child changes from year to year depending on government funding. The current amount can be obtained from contacting the nursery but essentially the grant covers part of the cost of 5 sessions of 2.5 hours per week. Payment of grant will be reduced proportionally for a child attending fewer than 5 sessions per week. Obviously our hours are longer than this for any given session and therefore the additional costs are chargeable.

The grant is not paid directly to the parent. The local authority pays the grant to us for each eligible child. The grant is paid over the school year which is divided into three terms because the grant is for nursery education available during school terms only. Payment therefore does not cover what would be normal school holidays.

Each term the nursery claims on behalf of the parents for the number of sessions their child will be attending. As the local authority often makes payment to the nursery a term in arrears, when Active Learning receives the payment for your child, your account will be credited against the next months fees.

Which children are eligible for grant? The grant will be available for many children from the start of the term following their third birthday until they start in a reception class.

A child aged three by:

• 31 March will be eligible for grant in the Summer Term
• 31 August will be eligible for grant in the Autumn Term
• 31 December will be eligible for grant in the Spring term

Grants can only be claimed for children attending nurseries at the beginning of the term. If you think your child may be eligible for a grant, you should contact the nursery about this as soon as possible. However, it is usual for us to ascertain in advance all the children on our roll who will be eligible at the beginning of each term.

HOWEVER, this funding may not always be available owing to changes in the way the Government is planning to operate the scheme.

The following report explains why and should this new scheme go ahead, Active Learning along with most other nurseries nationally would be forced to withdraw form the scheme. There is huge lobbying currently on the Government to prevent this happening and they are beginning to realise the potentially disastrous outcomes of their actions should they proceed.

The Issue The government is proposing a ban on charging ‘the additional top up fees which we and other nurseries charge for the additional hours over and above 2.5 hours that children attend. However, most nurseries are finding the funding they receive for 'free' sessions does not come close to covering the cost of actually delivering the sessions. With the explicit ban on the use of 'top ups' to make up the difference between the funding received from the local authority and the cost of actually delivering the session, many nurseries are reporting that they will be forced to pull out of the scheme or face bankruptcy. Parents usually acknowledge this issue happily and accept that the funding received does not constitute free childcare but does represent a very welcome subsidy. The Government proposals would put this in jeopardy and make childcare totally unavailable or unaffordable for many.

These difficulties are felt most acutely in higher cost areas such as London, other city centres and the South East, but they arise in other parts of the country too. Official records show all four year olds - some 559,400 children - use the free entitlement, as do 96% - or 541,700 - three year olds, with 17% of four year olds and 55% of three year olds in private and voluntary independent (PVI) settings (Provision for children under five years of age in England, National Statistics, 31 August 2006).

Day nursery providers have two principal concerns which, left unchecked, will have effects detrimental to children, parents and the sector:

• Under-funding - local authorities not paying enough per hour to cover the actual cost of the childcare
• Over-regulation - local authorities effectively 'gold-plating' the new code of practice, imposing a number of time consuming additional requirements on providers participating in the scheme

Unless these issues are addressed, day nursery providers could be forced to withdraw from the scheme, restricting parents' choice of childcare and reducing the number of places available, or else compromise their nursery's viability through progressive under-funding and scaled-back operations. In some cases the strict enforcement of guidance would leave nurseries with losses so severe that they would go out of business.