Changes In Childcare Vouchers

Posted: Friday June 8 2018

By: Banner Jones

One of the most common struggles for working parents is childcare, and the expense of private childcare is often at the top of that struggle.

Changes In Childcare Vouchers 2018

Many employers now provide access to a childcare voucher scheme where working parents can save up to £933 per year, per parent for care for children under 16. These schemes work via salary sacrifice in which the working parent has a contribution taken directly from their gross salary and paid directly in to the scheme. There are a variety of schemes available but from the 4th October 2018, childcare voucher schemes will be unable to take new applicants. Existing schemes can remain in force and existing applicants can continue to use the schemes.

The government has introduced a new scheme called Tax Free Childcare. On the face of it the new tax free childcare looks attractive as working parents can save up to £2,000 per year for each child under the age of 12 ( under 17 if child is disabled). This is increased to £4000 for a child with a disability. The catch is that to enjoy the full £2000 saving, eligible parents need to be spending as much as £10,000 per year on childcare fees. A parent’s eligibility and status will also need to be reconfirmed every 3 months.

Eligibility for Tax Free Childcare

Can only be used for children under 12.

If there are 2 parents in the household both parents must be working but single parents can join.
Each parent must earn at least £120 per week and neither parent can earn more than £100,000 per year.
Self-employed parents can join.

Parents claiming child tax credits or universal credits are excluded as are parents already claiming childcare vouchers.

If you are a working parent whose employer offers a childcare voucher scheme now is a good time to consider whether you wish to sign up. If you have not joined and made your first payment by the 4th October you will be excluded from doing so.

Likewise if you are an employer looking to offer benefits to your employees, you need to take advice on the cost and benefits of the scheme and act fast before the opportunity is lost.

Some useful guidance on the new tax free childcare scheme can be found on the government website at:

Changes In Childcare Vouchers