Rights for working parents

Being a parent is not easy, but neither is being an employer of parents. Although the requirement to pay tax credits through the payroll to employees has now ceased, there are several forthcoming changes to employment law which are designed to help working parents, and for which employers need to start planning now.

Maternity and paternity pay and leave

Maternity pay is currently payable for up to 9 months and the mother can take a further 3 months unpaid leave if she qualifies.

Fathers now benefit from an additional period of paternity leave, introduced alongside the extension of Statutory Maternity leave to 12 months. Fathers (and other paternity leave claimants) may take any unused maternity leave that the mother has not taken, if she returns to work after 6 months (known as the Ordinary Maternity Leave), but before the end of her maternity leave period.

Shared parental leave and pay

When the mother returns to work (but at least 2 weeks after the birth of the baby) the balance of any unused maternity leave is now available for both parents to share under the shared parental leave and pay scheme. Each can take up to three blocks of additional leave before the baby's first birthday, giving at least 8 weeks' notice of each. Payment is made at the lower rate of statutory maternity pay.

Flexible working

Once the parent is back at work he or she can ask their employer for a flexible working arrangement, if their child is aged under 6. Parents of disabled children can ask for flexible working if their child is aged under 18. The Work and Families Act extends this right to a much wider range of carers, including those who care for adults.

Childcare costs

While the parent is working, someone has to pay for the childcare, and the Government has been urging employers to help with these costs. Employers are able to provide their employees with childcare vouchers, or pay for childcare directly in a private nursery, with the first £55 per week (£243 per month) for basic rate taxpayers being free of tax and national insurance contributions (NICs). This figure may be reduced for higher rate taxpayers and additional rate taxpayers, depending on when they entered the scheme.

A solution, which is perfectly acceptable to HMRC, is to substitute some of the employee's pay with the childcare vouchers. This way the employer can save on national insurance, since employers' NICs are not payable on the value of the vouchers. However there are some practical difficulties with such a salary sacrifice. The employee must agree to the change in their gross pay before it takes effect, which normally means signing revised terms of employment. When an employee is no longer eligible for the childcare vouchers, perhaps because the child is too old, the vouchers should be withdrawn and the employment terms readjusted.

If you run your own company and have young children you can give yourself tax-free childcare vouchers, but remember that vouchers may only be redeemed with a registered or authorised childminder or nursery. The vouchers do not qualify as tax-free if they can be exchanged for cash.

Workplace nurseries

Employers who provide a workplace nursery can allow their employees to use the facilities with absolutely no tax charges. This is a very good deal for the parents who receive free or subsidised childcare close to their place of work, but many smaller employers cannot afford to set up such nurseries.

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

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You may also find the following pages, guides and case studies useful:

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