The Childcare Voucher Scheme is closing – Act Now!

11th September 2018 Nicky Cole
The Childcare Voucher Scheme is closing – Act Now!

From 4 October 2018, childcare voucher schemes will close to new applicants, but you may be able to get Tax-Free Childcare instead.

You can keep getting vouchers if you’ve joined a scheme and your wages have been adjusted before the scheme closes in October 2018, as long as:

  • you stay with the same employer and they continue to run the scheme
  • you do not take an unpaid career break of longer than a year

If you get Tax-Free Childcare

You cannot continue to claim childcare vouchers if you successfully apply for Tax-Free Childcare.

Which scheme you’re better off with depends on your situation. Use the childcare calculator to work out which type of support is best for you.

You must tell your employer within 90 days if you get Tax-Free Childcare. They’ll then stop giving you new vouchers.

You can continue to use any vouchers you already have, including to make a joint payment for childcare with Tax-Free Childcare. There’s no deadline for using your vouchers.

Once you’ve told your employer that you’re getting Tax-Free Childcare, you cannot rejoin their voucher scheme.

Tax and employer childcare schemes

You do not have to pay tax and National Insurance on:

  • childcare vouchers
  • childcare your employer arranges with a provider (sometimes known as ‘directly contracted childcare’)
  • workplace nurseries

You must pay tax and National Insurance on:

  • cash your employer gives you to pay for childcare
  • childcare provider’s fees your employer pays
  • school fees your employer pays

See where you fall under the new scheme:

Tax-Free Childcare wins for:

  • Self-employed people or couples who earn less than £100,000 each, as they’re eligible for Tax-Free Childcare, but can’t get childcare vouchers.
  • Parents with more than one child and high childcare costs, as the help available goes up with the number of children. There’s a limit for childcare vouchers which isn’t dependent on the number of children.

Childcare Vouchers win for:

  • Couples where one parent doesn’t work, as they’re not eligible for Tax-Free Childcare, but the employed parent is eligible for vouchers (provided their employer offers a scheme).
  • Basic-rate taxpayer parents with total childcare costs of £9,336 or less. Under this amount, the saving you make with childcare vouchers exceeds the saving you can make with Tax-Free Childcare.
  • Higher-rate taxpayer parents with total childcare costs of £6,252 or less. Under this amount, the saving you make with childcare vouchers exceeds the saving you can make with Tax-Free Childcare.
  • Higher earners, as anyone earning £100,000+ (or in a couple where one earns £100,000+) isn’t eligible for the scheme, whereas these high earners can get childcare vouchers

Further useful information can be found by clicking here.