The current Childcare Voucher scheme is closing to new entrants from 6th April 2018.
This means that you will need to be in receipt of Childcare Vouchers on or before 5th April 2018 to continue to benefit from the scheme. For many organisations the cut off will be the March payroll period.
Tax-Free Childcare is a Government scheme for working families to claim a top-up for childcare costs. The Government will pay up to £2 for every £8 you pay into your online account (equivalent to 20% of childcare costs). This is capped every 3 months at £500 in top-ups for each child.
The main changes with Tax-Free Childcare:
- Savings are applied per child, per household.
- Can be used for children up to 11 years old (16 if disabled).
- Self-employed parents can now join the scheme.
- You can receive up to £2,000 per child, per year towards your childcare costs, or £4,000 for a child who has a disability.
- You must re-confirm eligibility every three months.
To be eligible for Tax-Free Childcare you must meet the following criteria:
- If there are two parents in your household, both must be employed.
- Each parent (or single parent) must earn at least £120 a week (equal to 16 hours at the national minimum/living wage.
- Neither parent must earn over £100,000 per year.
- You cannot join if claiming Child Tax Credits, Universal Credit, or benefiting from the tax and NIC savings through Childcare Vouchers.
The Childcare Voucher scheme is managed by the employer and usually provided through salary sacrifice, which means employees can save on tax and NIC. Tax-Free Childcare however is managed through the Government and employers will play no part. Employees already in the childcare voucher scheme are not required to transfer to Tax-Free Childcare, unless you wish to, or if you change employer.
As with the childcare voucher scheme, money in your online account can only be used to pay for approved childcare providers. For details on approved childcare providers see here.
Some families will be better off in the Childcare Voucher Scheme, whereas others will be better off with Tax-Free Childcare. You will need to consider how your family’s circumstances may change in the future. To find out about your childcare entitlements and calculate whether you would be better off with Childcare Vouchers or Tax-Free Childcare, use the gov.uk childcare calculator.
Employees cannot be part of both schemes or re-join the Childcare Voucher scheme after 6th April 2018 if they leave.
For more information and advice on the changes to the National Living Wage and National Minimum Wage for 2018/19 please contact the Service Desk on 0345 222 1551 • Option 6 or email email@example.com