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New Ways to Achieve Growth?

There are many ways that the government and the business sector have considered to unlock growth potential within the UK economy – and with the Budget just around the corner, now seems like as good a time as any to give it a bit more thought. That’s exactly what the chartered accountants HW Fisher & Company have been doing, calling on the Chancellor to address a very important but often neglected part of the UK economy and business sector – childcare.

They claim that Britain’s confusing and expensive childcare for new parents returning to work is doing nothing to foster an atmosphere of innovation, entrepreneurship and sustainable growth. Many of the 8 million Britons working part time are parents with young children who can’t afford to work full time because of the cost of childcare, meaning they are unable to give their all when it comes to working life. This could be undermining business performance as well as limiting their own career progression, given the lack of childcare is making parents split their focus.

It is nearly seven years since the introduction of Childcare Vouchers, a scheme that allows parents to exchange part of their gross salary for childcare without paying tax or National Insurance – however, in all that time, the amount that can be claimed is still capped at £55 a week – which, in many parts of the UK, won’t even cover the cost of one day in a nursery. Limiting this to such a low figure makes the vouchers all but useless.

HW Fisher & Company have come up with a different solution; “Far better to allow employers to pay employees’ childcare costs directly to the childcare provider free of any NI costs for both employee and employer. This would reduce costs by approximately 25% for a basic rate tax payer. This would be simple to administer, making it more attractive to employers, and would benefit all employees.”

Is the cost of childcare affecting your employees? All eyes are on the Chancellor to see what the spring Budget announcement holds.

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