KR HR & TRAINING NEWS ARTICLES

From October 2018, the Childcare Voucher Scheme closed to new entrants and has been replaced with a Tax Free Childcare scheme. Here we explore the options for working parents moving forwards.

WHAT ABOUT EXISTING CHILDCARE VOUCHER USERS?

Staff who are already members of a childcare voucher scheme can continue to receive and use vouchers until their children are aged up to 15 (or 16 if they have a disability). So in addition to preschool and nursery care, childcare vouchers can be spent on after school clubs and Ofsted-registered holiday activities. This can be invaluable for working parents juggling childcare over the summer break. However, if a childcare voucher scheme member moves to a new employer, then they would not be able to apply for childcare vouchers at their new workplace. They will be able to continue to use up any leftover vouchers even after they have left their old employer.

WHAT IS THE DIFFERENCE BETWEEN THE EXISTING CHILDCARE VOUCHER SCHEME AND THE NEW TAX FREE CHILDCARE?

The old childcare voucher scheme allowed employees to purchase up to £243 in childcare vouchers from their pre-tax salary, giving both employees and employers tax savings. Tax free childcare operates independently from employers: parents need to set up an account to pay for childcare and this is topped up by government. It’s worth up to £2,000 a year per child: See the Tax Free Childcare Information on the government’s website.

Unfortunately, unlike with childcare vouchers, the employer does not receive any financial benefit if their employees use tax free childcare.  

AS AN EMPLOYEE, HOW DO I KNOW IF IT WOULD BE BETTER FOR ME TO MOVE TO TAX FREE CHILDCARE OR STICK WITH AN EXISTING VOUCHER SCHEME?

This depends on your personal situation. More information and worked examples of which scheme may be preferable, visit the Association of Tax Technicians website.