From 6th April 2018 childcare voucher schemes will close to new entrants. This means, unless you are already registered to your employer’s scheme, you will not be able to join. If you have already joined, you will be able to continue for as long as your employer runs the scheme, or as long as you stay with your employer.
The replacement scheme is called Tax-Free Childcare which is a government scheme that is not connected to the employer. Under this scheme, eligible families will receive up to £2,000 per child per year to help with the costs of childcare, assuming a maximum of £10,000 per year childcare costs per child. To join Tax-Free Childcare, the parents must set-up an online childcare account and the government will pay £2 for every £8 you pay in to pay your approved childcare provider. You will usually qualify for Tax-Free Childcare if you (and your partner, if applicable):
- Both work at least 16 hours per week and receive pay at the National Minimum Wage (National Minimum Wage) or higher but earnings cannot exceed £100,000 per parent.
- Have one or more children, under the age of 12
- Are not claiming Tax Credits, Universal Credit or childcare vouchers
Please note: You may still be eligible for Tax-Free Childcare if you are self-employed.
Which scheme will be better for you - childcare vouchers or Tax-Free Childcare?
| Childcare Vouchers | Tax-Free Childcare |
|
You can only apply for them if your employer offers them. You can save up to £933 per parent per year (£1,866 per family) based on a basic rate tax payer |
Anyone can apply, subject to eligibility criteria. You can save 20% on childcare costs of up to £10,000 per child (or £20,000 for disabled children) per household |
| Parents must be earning above the NMW after Childcare Vouchers are deducted (unless it is a Salary Plus scheme) and only one parent needs to be working | You will both need to earn at least the NMW of £125.28 per week from April 2018 (based on age 25+) and both parents need to be working |
| The maximum age where a child’s childcare can be paid for is 15 years (16 years if disabled) | The maximum age where a child’s childcare can be paid for is 12 years (17 years if disabled) |
| There is no upper limit on salary | Parents have to earn less than £100,000 per year |