Welcome to the FAQ section for the Childcare Cash Advance Scheme.
Q: Are there any tax implications in giving interest-free loan?
A: As long as the loan amount to the employee does not exceed £10,000 at any point in time there are no tax implications. (see HMRC for further details). Catapillr Ltd has also taken professional advice from tax specialists RSM and have received confirmation that our loan model is a non-taxable benefit.
Q: Is it just for working parents?
A: No, any employee can apply for and use our scheme, but payments can only be made to a childcare or children’s activity provider. Therefore, a grandparent could open up an account and help to pay for their grandchildren’s childcare costs.
Q: Is this open to all staff - contract, fixed-term and temporary as well as permanent?
A: This will depend on the criteria in general for lending to employees, which will differ between organisations, but we suggest that the scheme is aimed at permanent employees, who have completed a minimum length of service/probationary period.
Q: How is the loan amount determined?
A: The loan amount is determined by the employee’s company, as part of the set-up process. We ask that the employer sets a maximum loan amount that they wish to lend, as well as a maximum % of salary. Catapillr selects the lower of the two as the maximum amount that an employee could borrow. The employee then has the ability to select a lower amount.
Q: How does the online loan agreement process work?
A: We use a company called HelloSign to manage our loan agreement signing process. The agreement is a simple document, highlighting the responsibilities of both parties. Once the agreement has been signed by the employee, a copy will be sent to their employer. They will need to verify the details in the agreement, such as employee name, D.O.B., salary. Once they have completed their verification, they will then sign the agreement, which in turn will trigger the account opening process.
Q: How does the online payment platform work?
A: The online payment account is an e-wallet, issued by a company called MangoPay. They have an e-money license, issued by the FCA. Each employee, who completes the application process, receives a unique IBAN (International Bank Account Number) directly linked to their e-wallet. The e-wallet is a UK sort code and account from Barclays Bank.
Q: Can the loan only be used for early years education and childcare?
A: The scheme can be used with Ofsted (or equivalent) registered childcare providers or companies/organisations who provide childcare activities, such as school holiday camps, sports or activity clubs and tutors.
Our approach gives parents significant flexibility that doesn’t exist with any childcare support scheme at present.
Q: How does Catapillr determine who can be paid through the platform?
A: Catapillr will check that a childcare or children’s activity provider is a registered company or organisation with Companies House. In addition, the company will need to be registered under a relevant industry activity code, before they can be set up on the platform and receive any payment.
Q: Is it the outstanding balance that is recovered in full, if someone leaves?
A: Yes, it is the outstanding balance that is recovered.
Q: What if my employer doesn’t have a benefits framework to support the delivery of this loan?
A: Employers don’t need a benefits framework to deliver this scheme, they just need the capacity to deduct repayments from an employee’s salary with their permission.
Q: What if someone goes on nil pay, or on maternity leave before they have repaid the loan?
A: The loan is deducted as long as staff receive net pay so if there is insufficient net pay for whatever reason, it may not be possible to recover the loan in that payroll. If the member of staff leaves and there is a balance on the loan, the balance will be deducted from their final pay. If the loan exceeds their final net pay, HR will need to work with the employee to recover the balance due.
Q: What happens if Catapillr Ltd goes bust?
A: Catapillr Ltd does not have any access to the funds deposited into the employee accounts. Therefore, in the unlikely event of Catapillr Ltd no longer being able to trade, the money in the platform would be perfectly safe. Catapillr Ltd has identified a national firm of accountants, who would be able to step in and run the platform until all accounts were at a zero balance.
Q: Will loan repayment deductions from monthly wages affect the amount of Universal Credit an employee receives?
A: No. The amount of Universal Credit someone receives each month is calculated based on gross pay and won’t be affected by loan repayment deductions.
Q: Will the loan affect minimum wage calculations?
A: No. Employer loan repayments by an employee will not reduce a worker's pay for minimum wage purposes. Further details can be found here.
Q: Can the scheme work with Tax-Free childcare?
A: Yes. The scheme can work alongside any available government childcare support. A great feature of the childcare cash advance account is that once an employee has an account, they can link it to their tax-free childcare account and in turn transfer funds so that they continue to take advantage of the government top-up.
Q: Can the scheme work with childcare vouchers?
A: Yes. The scheme can work alongside any government childcare support.
Q: Is this a salary sacrifice process?
A: It is not a ‘salary sacrifice’ scheme, just a loan that is repaid in full by the employee.
Q: Doesn’t Universal Credit pay for childcare for people on low incomes?
A: Universal Credit only pays for 85% of childcare costs and pays claimants in arrears leaving many people on lower incomes unable to pay for upfront childcare costs.
Q: Is Catapillr Ltd a registered company?
A: Yes. Catapillr Ltd - registered Office: Kemp House, 160 City Road, London, EC1V 2NX. Registered in England and Wales - company number: 11814672.
Q: How do I contact Catapillr?
A: The best way to contact us is via firstname.lastname@example.org, alternatively you can email our CEO email@example.com.
Q: How does Catapillr manage, store and use personal data?
A: Catapillr will be a data controller for the purposes of GDPR. We will securely store only relevant data and we are registered with the ICO, reference ZA551228.