Childcare v Employment

The Family and Childcare Trust's annual report recently said that a family with two young children will pay more for childcare than the average annual UK mortgage payment. Full-time childcare cost for a family with a two-year-old and a five-year-old child are estimated at £11,700 a year, while the average mortgage costs £7,207 per year in 2012. Such high costs mean that children lose out on early education and many women do not return to the work place. In turn employers lose skilled and knowledgeable employees as mothers cannot afford to return to work.

This is an ongoing issue, exacerbated at this time of year as working parents have to arrange childcare while their children have a six week break from school. With childcare costs rising over these peak times, more employees take unplanned time off work to look after their children while employers have to fork the costs of absent employees.

The two key areas in which employers can help working parents are a flexible approach and support with relevant child care schemes.

Employees who work at least 16 hours and qualify for Working Tax Credits may be entitled to extra tax credits to help cover the cost of their childcare. This will not be 100% of the costs and will depend on the employee’s income and how often childcare is paid for. The Childcare Tax Credit is designed to help working parents cover some of the cost, so that they still gain by working. The Tax Credit Helpline can provide more information.

Childcare vouchers can save many parents with children aged up to 15, over £1,000 a year on childcare. The vouchers are offered via the employer. It’s a considerable benefit for employee as the vouchers enable employees to pay for childcare out of pre-tax and National Insurance income, but costs the employer minimal administrative costs to run.

In the 2014 budget the Government announced a new Tax-Free Childcare scheme to replace the existing childcare vouchers in autumn 2015. The new scheme will be available to everyone who works more than eight hours a week, earning more than £2,420 a year (both parents must work if the employee is part of a couple) and who pays for childcare. Unlike Childcare Vouchers, it'll be open to the self-employed too. Eligible families will get 20% of their yearly childcare costs up to £10,000 per child paid for by the Government. This could mean payments of up to £2,000 per child.

Encourage employees to source (or share information about) local free childcare for three or four year olds. There are free ‘early learning’ classes (includes time at a school-attached nursery) available for all three or four year-olds (starting from the term after a child's third birthday). For at least 38 weeks a year children are entitled to 15 hours a week (to be spread over at least three days). Families with a low income may also get free classes for two year olds.

At this time of year, working parents face a real dilemma as they struggle to make provision for school-age children. If they have not already done so, suggest they contact the following resources for local free or low cost child care activities.

If you can help to reduce or remove holiday childcare worries you stabilise the workplace. Helping working parents helps your business.

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