Childcare Vouchers - tax relief question

MrChips

Hi,

My wife has been collecting childcare vouchers since our son was born in January 2011. This predated the change to the tax relief and as such she has been able to receive £243 of vouchers each month with higher rate tax relief.

Her employer has recently spun off her division into a new joint venture and I think (but not 100% sure) that this will involve a technical change in her employer. The "new" employer has recently asked for her NI number to be able to set her up again on the childcare voucher scheme. This got me wondering...

Is there a risk that she could lose her continuous child care voucher receiver status and lose her higher rate relief as a consequence? Or is the system designed to be able to work around such wrinkles as this?

I was trying to research the issue online and I found reference to it being possible to take up to a 12 month break and not lose the higher rate status, but not sure if this is only if you remain with the same employer.

Thanks!

rpc

If the transfer is covered by TUPE? If so, the current entitlement must carry across or your TUPE rights would be broken.

Don't expect the employer to get this right though! It involves the employer knowing what should happen and that can be quite rare with childcare vouchers

HMRC wrote:

A change of employer which is outside your control
If your change of employer is triggered by a business merger or acquisition, HMRC will not require you to be treated as a new joiner to your new employer’s childcare scheme. You will remain within the old rules as long as you were in your previous employer’s childcare scheme before 6th April 2011. That means you will continue to be eligible to tax relief on £55 per week for the time you remain in your new employer’s scheme.
The same treatment for employer-supported childcare purposes will also apply where a transfer of staff under a COSOP or TUPE arrangement has been made.
However, the same treatment will not apply where there has been a formal change of employer through an intra-group transfer.

Source: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/367098/employee-qa2.pdf

MrChips

Thanks rpc. The transfer is not covered under TUPE as it isn't a business sale or part of an outsourcing agreement, rather the setting up of a joint venture and consequently a new employing entity.

I also found this article also which suggests she may be ok, depending on the strict interpretation of the move. It would seem perverse if she was to lose out when she is still doing the same job for, effectively, the same company and surely not the intention of the 2011 change.

http://www.thisismoney.co.uk/money/experts/article-2564569/Will-I-entitled-childcare-vouchers-I-jobs.html

rpc

MrChips wrote: »

Thanks rpc. The transfer is not covered under TUPE as it isn't a business sale or part of an outsourcing agreement, rather the setting up of a joint venture and consequently a new employing entity.

I guess it will depend on the strict definition of what is happening. If her business unit is being part-sold (to form a JV) then it sounds like she should be OK. If the JV is being formed and she is being moved into it, then it probably isn't OK.

The HMRC quote covers more than just TUPE, there is probably a detailed regulation somewhere but if it is that hard to find then don't expect and employer to get it right. Without TUPE protection, I suspect any carryover of protected rights could be allowed but not mandatory.

MrChips

Thanks rpc - we've sent an email to her HR to clarify how they see it working.

It's all a bit beyond my level of expertise!

Mupette

If sounds a little like the employer is moving her onto a new scheme, which really shouldn't cause problems as long as the employer tells the childcare voucher company.

If she is still employed by the same employer all but split to another 'department' shall we call it. then should be covered and keeps the parental rights

MrChips

Response from HR is in. I don't think they fully understand how it works themselves so they emailed the voucher provider.

"Transfer of scheme will not affect your tax relief.
Please see reply from the provider:
“If your employee / employees have had voucher orders in place since April 2011 and have not either changed employers (outside of a tupe transfer) or had a break of more than 52 weeks they will be able to continue ordering the vouchers for the higher amount of £243.”"

So seems like good news. Thanks everyone.

rpc

But the problem isn't transferring between schemes (which the response covers) it is this bit from your original post:

this will involve a technical change in her employer

and from their response:

have not either changed employers (outside of a tupe transfer)

The question isn't whether the transfer between schemes will affect the tax relief, but whether the change in employer will.

You have suggested that your wife is changing employer outside the scope of TUPE so the reply from the scheme doesn't apply because she doesn't meet the conditions that the scheme specified.

I don't think HR understood the question.

Emily1975

To be honest it seems like no one understands what is going on! But if it will continue to be administered as if employer hasn't changed, that works for us.