Childcare vouchers let employers give their employees vouchers as coverage for their childcare needs.
Engaging employees and ensuring high productivity is a massive challenge in today’s world.
At the heart of this situation is the unique set of needs that millennials and Gen-X bring to the world of work.
With childcare vouchers, employees can help bring down their employees’ childcare expenses.
This personal touch can hit an emotional chord in the employees’ hearts forging loyalty and commitment.
Unfortunately, that great way of engaging employees was taken away on October 4, 2018.
The Tax-free Childcare scheme replaced it.
Still, it’s worth remembering the scheme and hoping it’ll come back one day.
One element of the scheme that I loved was that even though workers paid a small fee to get in on it, they would always come out ahead with the savings it offered.
Here’s an example of how it worked.
Say you gave up a thousand pounds of your salary to participate in the scheme.
If you hadn’t participated, your thousand pounds would have been taxed down to say seven hundred pounds.
But then you’d get back a thousand pounds worth of vouchers!
That’s a straight-up three hundred pounds of benefit received.
And what made the scheme an even greater win-win was the healthy competition between the childcare voucher companies.
With their help, parents could save almost a thousand pounds each year up until a kid’s sixteenth birthday.
So what about the scheme that replaced childcare vouchers?
The Tax-free Childcare scheme isn’t so bad if you have a big family (four children or more).
But most households aren’t that big (the average is around two kids).
So in the context of the typical UK, family vouchers work best, especially if the childcare costs aren’t high.
Not to mention the high flexibility Childcare vouchers had compared to the Tax-free Childcare scheme (no minimum earnings requirements and only one parent needed to work versus 155 pounds per week minimum earning and both parents working).
So I’m all for bringing the old scheme back.
What about you?