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Government childcare voucher scheme is closing to new members

Parents are being reminded to apply for Childcare Vouchers as the scheme will be closing to new members as of 4th October 2018. The system which was first introduced in 1989 allows parents to buy childcare vouchers through their employer before tax and national insurance are deducted.

What is the tax-free childcare scheme?

Launched by the government in 2017, the Tax-Free Childcare (TFC) scheme will replace the current system of Childcare Vouchers. Under the new scheme, parents cannot claim universal credit or tax credits alongside TFC, something they were able to do under the old system.

Analysis from the Childcare Voucher Providers Association (CVPA) suggests most families will be worse off as a result of TFC as opposed to the Childcare Vouchers scheme. A spokesperson said:

“There are currently over 600,000 users of childcare vouchers, and the scheme has helped well over a million families to afford high-quality child care since 2005. Over 50,000 employers, employing 15 million people, offer childcare vouchers.”

“We urge all parents that are considering joining the Childcare Voucher scheme to do so ahead of their relevant payroll deadline.”

Childcare Vouchers vs TFC

  • According to moneysavingexpert.com, Childcare Vouchers benefit couples where one parent does not work or those who spend less than £9,336 per year on childcare. High earners also benefit from the old scheme as those earning above £100,000 are ineligible for TFC.
  • TFC will help the self-employed who are unable to claim Childcare Vouchers under the current system. Parents with more than one child and high childcare costs will also favour TFC as they can receive up to £2000 per child. Childcare Vouchers are not an option should you be in a couple who earns less than £100,000; however it does mean you are eligible under the Tax-Free Childcare scheme.

CVPA Chair Jacquie Mills said:

“We strongly advocate keeping Childcare Vouchers open alongside TFC beyond October to give parents a comprehensive and flexible support package, upon which they can make an informed choice about the childcare support that best suits their needs”.

“We remain committed to working with the government to achieve this as the Childcare Voucher scheme is an essential lifeline for many parents.”

To qualify for childcare vouchers, parents must have purchased their first voucher by the deadline in October. They can only be claimed through employers, who typically need a months notice.

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