Aberystwyth University Childcare Vouchers Salary Sacrifice Scheme

Introduction

There is now a more flexible way to meet the costs of your childcare. Aberystwyth University has set up a scheme through Edenred, which will allow you to exchange, or sacrifice, part of your salary for childcare vouchers. Staff who are eligible to participate in the scheme have the potential to reduce their tax and National Insurance contributions.

1. What is a salary sacrifice scheme?

A salary sacrifice happens when an employee agrees to alter their contract of employment, and give up the right to receive a portion of their salary. In return, via Edenred Childcare Vouchers, a payment is made to an approved childcare provider nominated by the employee. The employee’s tax and National Insurance deductions are based on the reduced salary.

2. How does the employee benefit?

If you join the scheme, you can exchange up to £243 of your gross salary each month for childcare vouchers (£124 per month if you're a higher rate taxpayer; £110 per month if you're an additional rate taxpayer). The part of your gross salary that you exchange for childcare vouchers is tax-free and exempt from National Insurance contributions, saving you up to £77 per month

3. Pension contributions

If you make contributions to the Aberystwyth University Pension Plan (AUPP), Dyfed Pension Fund, or Universities Superannuation Scheme (USS), your contributions will be based upon your gross salary; in other words, the amount you earn before the application of the salary sacrifice. Members of these Pension Schemes will not lose pension benefits. This is because both employees and the University will continue to make pension contributions based upon your original salary.

Those with personal pensions, or those paying AVCs, should seek independent financial advice, as these may be affected by the salary sacrifice agreement.

4. How does the University benefit?

The scheme will be part of the University’s approach to work-life balance, and will help to attract and retain employees by giving them the option to make savings in their childcare costs.

5. Who can join the scheme?

Employees of Aberystwyth University who:

  • Have parental responsibility for any child(ren) (this includes stepchildren);

  • Receive a regular, monthly salary.

6. What does ‘parental responsibility’ mean?

That you have the same legal rights, duties, powers, responsibilities and authority as a parent for a child and the child’s property.

7. What can the vouchers be used for?

You can use Childcare Vouchers as full or part payment for a:

  • Day Nursery

  • Nursery School

  • Childminder

  • Playgroup / Crèche

  • Pre-School

  • Holiday scheme

  • Qualified nanny / Au pair

  • Out of school club

  • Holiday Play Scheme

To benefit from the Tax and National Insurance exemption your childcare provider must hold either a current registration certificate with a unique reference number (URN) or an approval certificate with an expiry date and reference number.

Recognised approval organisations include:

  • Childcare Approval Scheme (Wales)

  • The Care Standards Inspectorate (Wales)

Edenred provide a childcare advice line to all parents receiving Childcare Vouchers which can help find childcare in your area.  Please see your parent welcome pack for more information.

8. Can I use the vouchers to pay a carer?

Yes, as long as the carer is registered or approved. Edenred will request that the carer provide them with a copy of their registration or approval certificate.

If your chosen carer has a registration or approval certificate, but does not already have an Edenred Account Number, they simply need to join Edenred to accept the Childcare Vouchers. They can do this quickly and easily online.

9. Are there any other conditions?

The post-sacrifice salary cannot take an employee’s earnings below the National Minimum Wage or the Lower Earnings Limit. If your earnings fall below these limits, it can affect your entitlement to benefits such as Working Tax Credits, Child Tax Credits, and Statutory Maternity Pay.

If the application of the salary sacrifice does result in your salary being lower than the National Minimum Wage, then we will be unable to agree to the salary sacrifice element. You may still join the scheme, but you will not make any saving on tax and national insurance payments. Your Tax and National Insurance payments will be unaffected.

Further information about the Lower Earnings Limit and the National Minimum Wage can be found on the Inland Revenue website: http://www.hmrc.gov.uk/rates/nic.htm

10. What is the role of the Inland Revenue in relation to the Scheme?

The Inland Revenue have approved the Scheme.

11. Can I leave the scheme at any time?

Due to Inland Revenue rules and regulations, you cannot leave the scheme at any time. Your variation to contract will run from the first month that your salary is affected, and for the following twelve months.

You can only leave the scheme if there is a lifestyle change. The following are accepted lifestyle changes:

  • The employee ceases employment with the University.

  • The employee‟s salary changes, such that their post-sacrifice income will be less than the National Minimum Wage, or below the Lower Earnings Limit.

  • There is another significant change in the employee‟s contractual hours or salary (for example, a member of staff on maternity leave).

  • In the event of “unexpected life changes”, which is anything linked to birth, death and marriage.

  • Change in childcare arrangements.

Alternatively, you can amend the amount you pay into the scheme: the maximum is £243 per month (£124 per month for higher rate taxpayer; £110 per month for additional rate taxpayer), and the minimum is £1.  

12. Can I join the scheme at any time?

Yes. The scheme will run for twelve months from the date of joining. Parents wishing to join the scheme must submit their completed salary sacrifice agreement to the Payroll Office at least one month before the date on which they wish to join. The completed agreement can be sent as a hard copy to: Payroll, Human Resources, 12 Science Park, Cefn Llan, Aberystwyth, SY23 3AH. Alternatively, a scanned version is also acceptable; digital copies can be sent to: payroll@aber.ac.uk, or directly to Beth Head (myh@aber.ac.uk)

13. What is the process for applying to join the scheme?

1)    Read the Information Booklet (Terms of the Scheme),

2)    Read the information available on the Edenred website: http://www.childcarevouchers.co.uk/parents/#.WG-bFlOLSUk,

3)    Seek independent financial advice if appropriate

4)    Complete the Salary Sacrifice Agreement (.pdf). This agreement will act as an addendum to your contract of employment.

Once the first "sacrifice" is made from your salary you will then receive a Parents’ Pack in the post from Edenred. The Parent Pack contains everything you will need, your account details, and a letter explaining how to proceed.

14. What if I take unpaid leave?

You must let Human Resources know two months in advance that you will be taking unpaid leave. You can apply to re-enter the salary sacrifice scheme when you return from your period of unpaid leave. You must give us two months‟ notice of your return date.

15. Will I still be awarded any pay awards and increments?

Yes. Relevant pay awards and increments (including increases in salary due to promotion) will be added in the normal way, and do not affect your payment for childcare vouchers.

16. Will my child tax credit and/or my working tax credit be affected?

Tax credits may be affected by the salary sacrifice scheme.

Further information is available on the Family and Childcare Trust website, which is the national childcare charity, at http://www.familyandchildcaretrust.org/. Alternatively you should seek independent financial advice, or contact the tax credit office before you join the scheme if you are in receipt of credits (or think you are likely to be in the future). If you are already in receipt of tax credits, you may wish to consider if you would be better off with, or without, the childcare vouchers. To help you decide, there is a useful calculator on the Government website: https://www.gov.uk/childcare-vouchers-better-off-calculator

If you are in receipt of other benefits, these may also be affected. You should contact your local social security office or your local authority for independent advice.

17. Will allowances such as maternity pay, paternity pay, and sick pay be affected?

If you are entitled to Occupational Maternity/Paternity/Sick pay, then this will not be affected by the salary sacrifice element of the childcare voucher scheme.

If you do not qualify for Occupational Maternity/Paternity/Sick pay, but are entitled to Statutory Maternity/Paternity/Sick pay, then the statutory elements may be affected because they are linked to the amount you pay in National Insurance. Please see question 9 for more information.

More information on Statutory Maternity Pay can be found here: https://www.gov.uk/maternity-pay-leave/overview

More information on Statutory Paternity Pay can be found here: https://www.gov.uk/paternity-pay-leave

More information on Statutory Sick Pay can be found here: https://www.gov.uk/statutory-sick-pay/overview

18. What are the implications for entering into a mortgage agreement?

Since the vouchers form part of your remuneration package, they will be included in your earnings for the purposes of entering into a mortgage agreement.

19. I am employed on a fixed-term contract. Can I still join the scheme?

Yes, your appointment letter will take this into account. If your fixed-term appointment is extended, you will normally be able to continue your participation in the scheme for the duration of your extension.

20. Will I revert to my original salary when I leave the salary sacrifice scheme?

Yes. When an employee leaves the scheme, but continues employment with the University, their salary will revert to the appropriate contracted amount.

21. How will Human Resources know if there are any changes to your personal circumstances?

It is the responsibility of the member of staff to inform Human Resources of any changes. Human Resources would appreciate it if you could provide at least one months’ notice of any changes.

22. My partner and I are both eligible to participate in the salary sacrifice scheme. Can we both join?

Yes, provided you are both employees of Aberystwyth University.

23. Where can I get independent advice?

The University cannot give you independent advice. Employees interested in joining the scheme are first, therefore, advised to seek independent advice from, for example, the Citizens Advice Bureau or an independent financial adviser. You will need to confirm on the application form that you have been advised to seek independent advice. Some useful contact details are given below:

  • Tax and National Insurance

    • West Wales Area: Ty Nant, 180 High Street, Swansea, West Glamorgan, SA1 5AP.
    • Tel: 0300 200 3300 / Ffon: 0300 200 1900
    • http://www.hmrc.gov.uk/

 24. What should I do if I have a problem with the Scheme?

If you have any questions about your salary, or the deductions made via salary sacrifice, please contact our Pensions and Employee Benefits Officer on 01970 628706, or via email: myh@aber.ac.uk or payroll@aber.ac.uk

If you have any questions or queries about the operation of the scheme itself, please contact Edenred directly on 0800 247 1233, or visit their website (Click here). You may need our Childcare Voucher Scheme ID, which is: C10049108

Further information

  • Failure to comply with the terms of the scheme, as set out in this booklet, may result in the University removing an employee from the scheme, and/or the employee having to repay any savings they have made.

  • The scheme will operate for an initial twelve-month period, at which point its operation will be reviewed.

  • The University reserves the right to withdraw the scheme at any time, should there be changes in Inland Revenue, or other relevant guidelines or practices.

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