Virtual vouchers - cost to employer

[acnebride]

Has anyone else's employer found that it costs them a small amount to do virtual vouchers?

My employer has found that they are paying just over £13 a month, plus the Kidsunlimited service charge. I have agreed to cover all this out of the saving I am making, so there's not going to be much left. I thought the scheme was costless to employers?

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As far as I know it should be cost neutral at worst. They should save on the employers NI contributions - assuming you are having £217 a month that would be £27.77 @ the current rates of 12.8% (full rate) or £20.18 @ 9.3% (contracted out). I'd be surprised if the voucher companies were charging as much as £13 on £217 of vouchers, let alone £13 plus the service charge in excess of the saving.

I've seen 8% quoted as a service charge elsewhere - so if this is true I'd suggest they ask for comparitive quotes from other voucher providers (or even that you call other providers and ask for indicative figures yourself).

Are you sure the £13 isn't the total service charge, and they're conveniently forgetting about their NI saving?

Have a look here - these people describe themselves as "First childcare voucher scheme for
SMEs - benefit while saving money". Their site actually says they cahrge "a percentage management fee on the face value of vouchers ordered. This management fee is reflective of the type of vouchers ordered, the frequency of your pay periods and the number of employees on the scheme. Even if you only have one person using Childcare Choice, you will still save money." You can register with their site to find out exact figures.

this site also says "The costs involved......

The charge for managing a childcare voucher scheme is based on a portion of the saving that the employer enjoys. This is payable monthly, at the same time that the value of the vouchers is paid.

Fair Care does not charge any initial or set-up charges for its services.

The management charge is subject to VAT @ 17.5%, but there is no VAT applicable to the vouchers."

Again it looks like it should be a net saving to your employers.

Or here "as an employer, you will save Employer's NI contributions which will cover any service charge, so your scheme will be cost neutral (with a saving that can be re-invested into other family-friendly benefits within your organisation, or simply offset against any soft costs of running the scheme)."

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this one says "Competitive management fees ranging between 5 and 6.5% of the face value of vouchers ordered"

Dh and I have a small Ltd company and I order Childcare Vouchers from Busy Bees for us. They charge 8.5% + vat on the service charge (no VAT on the actual voucher value), which brings the total cost of the vouchers up to 10% of the order value (if your employer is VAT registered, effectively the VAT cost is zero). Employer's NI contributions are slightly more than this so there is a small net saving overall.

I know that the commission/service cost is lower for a larger business (can get it down to around 6.5% + vat) but smaller volume orders = larger service charges.

I have to say that I have found Busy Bees very efficient. I don't order "virtual vouchers" though; I place my order by email, do a bank transfer, then the vouchers arrive in the post a few days later. I then hand over however many I need over to the childminder. She calls up Busy Bees, quotes the reference numbers and the money is transfered into her bank account. I'm not sure if they do virtual vouchers but perhaps your employer could check if they are not satisfied with their current provider.

many many thanks for all your detailed responses. i have to say i'm now more confused but in a productive way i think. oh help, i thought this was sorted!

anyone else doing this via kidsunlimited?

Acnebride - i think it is outrageous that you are paying the service charge!

Most voucher schemes are set up to be cost neutral to the employer, because of their tax/NI saving. YOU are the one who is supposed to benefit. I think they are acting very dubiously in letting you pay!

Are you the only employee taking advantage of this in your company? Is it a small company? Because in fact you can do this without a voucher scheme. Your company juts has to contract the nursery direct to give you £217 worth of childcare a month (if you are using the max tax , and do a standing order to the nursery. then the nursery will bill you for any remaining balance.

um um. thing is, last week the bank manager rang my boss and said he was going to refuse any more cheques unless they pulled their socks up, so i am reluctant to ask for even a few pounds more at the moment, even though i know they could offset it against tax. i might try it again in a couple of months.

i rang the inland revenue (on my own phone/time but i knew they wouldn't do it as fast as i wanted it to happen) and they said, yes, it quite often costs the employers a little bit but they can offset it. i asked specifically about employers NI but that didn't seem to change the answer. (sigh)

gonna try again though. thanks all.

When I rang Inland Revenue about this originally they didn't seem to know much about it. However, eventually I spoke with a Technical Advisor and he was really helpful. I got hold of him by calling the New Employers Helpline and when the person answering the phone couldn't answer my questions, I was put through to an employer's Technical Advisor.

You don't have to give the details of your company when you ring the Employer's Helpline and they're used to talking to small employers who don't know what they're doing, so ringing the Employer's Helpline might be your best bet (pretend you are a small employer rather than an employee) to get detailed info on how the system works and how your company benefits from introducing a CCV system.

Blu is correct about contracting directly with the nursery. I asked IR about this too but was initially told an employer can't do this. However, the helpful technical advisor told me it was perfectly legal. The company has to contract directly with the nursery and be liable for payment. When I go back to work after my maternity leave ends, I intend to see if my company can do this so we save on the service charge. It will mean that my childmonder has two contracts though - one with my company (for up t o £217/month) nad the other one with me as an individual.