Will the changes to childcare vouchers affect me?
Question: I am employed and have two children aged twoÂ and three. I currently receive childcare vouchers from my employer which help with the cost of my childcare.
I have recently heard that there are changes happening regarding this. Will these changes affect me?
On 4 October this year, the Childcare Voucher scheme will close to new applicants. As you are already a part of this scheme, you will be able to remain in it after it closes providing you have received your first voucher before this date.
You may have heard of another scheme which the government launched in April 2017 called ‘Tax-Free Childcare’. This scheme enables employees to receive up to Â£500 every three months for each of your children (or Â£1,000 if you have a disabled child) directly from the government. It is designed so that for every 80p you put in, the government will add 20p. For example, if your childcare bill was Â£500 per month you would pay Â£400 per month with the remaining Â£100 being paid for by the government. Over the year, this would cut your childcare costs from Â£6,000 to Â£4,800.
To qualify, both parents or partners in the household must be working and you will each need to earn at least Â£125.28 per week but less than Â£100,000 per year. The scheme is also open to self-employed people.
Under the Childcare Voucher scheme that you are currently a part of, a child is a qualifying child up to a maximum age of 15 (16 if disabled). Under the Tax-Free Childcare scheme, a child is a qualifying child up to a maximum age of 11 (16 if disabled).
Under Tax-Free Childcare, your employer does not need to offer the scheme in the way that they do with Childcare Vouchers. Providing you are an eligible working family you can join. If you decide to join the Tax-Free Childcare scheme, you must tell your employer within 90 days so that they can stop issuing the vouchers.
You cannot get Tax-Free Childcare at the same time as claiming; Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers. It is also worth noting that your childcare provider must be signed up for the scheme before you can pay them from it.
To join the scheme, you will need to set up an online childcare account via www.childcarechoices.gov.uk. Only one parent can open the account although both can use it. The government will top up the account with the extra cash on the same day, so if you put Â£80 into the account in the morning, by the afternoon on the same day this should have been topped up to Â£100.
Every three months, you will need to reconfirm that you are still eligible for the scheme. Once the account has been set up, you will then be able to send payments from this account to your childcare provider’s bank account.
To help you calculate which scheme would be best for you, a childcare calculator can be found at www.gov.uk/childcare-calculator.