Tuesday, 21 October 2014

Parliamentary Review of Tax-free childcare

October 2014: Parliamentary Review of Tax-free childcare

On the 14th October 2014 the CVPA gave evidence to the Parliamentary Committee which is reviewing the Tax-Free Childcare bill.

The CVPA highlighted three main concerns about Tax-Free Childcare:

1.  The removal of employer input.  Childcare Vouchers are a vital part of employers’ family friendly policies.  Over 60% of companies surveyed would like to still be involved or support employees with childcare, even with no NI savings.  Childcare Vouchers play a vital role in helping parents return to work, especially after maternity leave. 

2.  Tax-Free Childcare is a less progressive scheme.  Many parents will be worse off under the new scheme, in particular basic rate tax payers with lower childcare costs.

3.  Details of how the new scheme will operate.  The complexity with quarterly eligibility checks and ring-fenced funds for each child is a cause for concern.

The CVPA have also expressed concerns on the appointment of NS&I.  Although a well-respected organisation, NS&I do not have experience of administering timely payments to childcare providers.  The lack of a structured tender process when appointing NS&I leads the CVPA to believe NS&I may not be the best value solution.

The Committee have also heard evidence from other stakeholders including childcare professional associations, NS&I, children’s charities, Mumsnet, Citizens Advice, payroll and personnel professional organisations, London School of Economics and Political Science and HMRC. 

The Committee must complete consideration of the bill by 5pm on Tuesday 28th October.

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