The workplace childcare vouchers scheme will close to new entrants on 4 October 2018, after the government extended the deadline. The scheme was due to close from 6 April 2018 and the change was announced just before this deadline, despite concerns over the scheme’s closure being debated in Parliament in January.
Workplace childcare vouchers are being replaced by the government’s tax-free childcare scheme, which was introduced from April 2017. The government will fund 20% of childcare costs per child each year, up to £10,000 – a maximum of £2,000 – under tax-free childcare.
Parents already using childcare vouchers will be able to carry on after the deadline, if they remain with their current employer, and their employer continues to offer the scheme. Up to £2,916 of childcare vouchers can be provided each year. Directly contracted employer childcare arrangements will also remain open to new entrants until 4 October 2018.
However, some people using childcare vouchers will not be able to move to tax-free childcare, for example:
• If only one parent works – both parents usually need to be working to qualify for tax-free childcare.
• Earnings are insufficient – minimum average earnings of 16 hours at the national minimum/living wage are normally required
• If either partner earns £100,000 or more a year.
• The children aged between 12 and 15 – tax-free childcare is normally only available for children aged 11 or younger.
Childcare vouchers are usually provided under a salary sacrifice arrangement, saving the employer 13.8% of national insurance contributions, with employees also benefiting from tax savings. No such tax advantages apply to tax-free childcare.
You can check how much you could get towards childcare using the calculator on the Gov.uk website – https://www.gov.uk/childcare-calculator.