Coalition government expects up to 100,000 parents to return to work!

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The government has recently announced it expects up to 100,000 parents to return to work, when their child reaches 5 years old. Parents who do not abide by this rule will suffer a benefit reduction or removal. In some parenting communities this has caused an uproar, with the issue of working hours fitting around school times being particularly prominent. In particular this heightens the issues surrounding the cuts to the Childcare Vouchers scheme.

'New figures show that many parents with two children pay nearly 17,000 annually on full-time childcare, leading to many of them having a problem with debt.' Source: Aviva Cots study

This means that benefits such as the Childcare Vouchers scheme will become even more important in the decision making process for these parents returning to work. Currently not all companies are taking advantage of the scheme (despite the benefits that companies gain from joining), meaning that returning to work parents will need to consider which company they join, and any benefits that are provided to them by joining this company.

This could also affect parents who are already working as they will be cutting the benefits in April 2011, but joining before then would ensure that you achieve the Childcare Vouchers at current rates. This is particularly useful to higher earners, who will be the most effected by the cuts, but it will also affect lower earners too.

Find out more about the Childcare Voucher scheme cuts that will come into place in April 2011

Higher Earning Tax payers

Higher earning tax payers are being hit the hardest with the cuts from the coalition government as they attempt to target those who can afford to look after themselves rather than depend on the state. The deficit in the budget needs to be cut, and by targeting these higher earners, the government will reduce the amount of people who simply could not live without the benefits they receive. The government hopes to ensure that a vicious circle creating child poverty is not spawned.

The fact of the matter is though, that higher earners can still benefit from this tax break, and by acting sooner rather than later they have the opportunity to gain the maximum benefit from the Childcare Vouchers scheme. The cuts are clearly not aimed at reducing the benefits available to current earners, but imposing newer more stringent rules in the future.

Lower Earning Tax Payers

Lower earners will also have their scheme cut, which will cause some controversy, however, they too can benefit by joining the scheme early. The cuts to lower earners will be lesser than the higher earners. In fact the move is an attempt to readdress the balance of power, as in the current scheme higher earners actually benefit more than lower earners, but in the new scheme lower earners will see more benefit.

Find out more about the Childcare Voucher scheme cuts that will come into place in April 2011

How can companies benefit from encouraging early utilisation of these benefits?

Companies who have a number of higher earners, would be able to benefit from encouraging their employees to take up the scheme now rather than at a later date, as they themselves would be in line to save a significant amount of money. Companies that are not part of the scheme can sign up relatively quickly and easily, ensuring a good uptake before April 2011 is possible if companies act now.

Find out more about how your company could save money by starting a Childcare Vouchers scheme

Find out more about the Childcare Vouchers scheme

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