As of 6th April 2018, the Childcare Voucher scheme will no longer be available to new parents wanting to join the scheme.
Parents will instead have the option of tax-free childcare (TFC), an initiative that was launched in April 2017.
The new scheme is not as favourable for all parents, so it may be more beneficial to opt in for the existing childcare voucher scheme before the deadline.
Find out more about the changes and if you could be better off applying for childcare vouchers before the scheme closes below.
What Is Tax-Free Childcare?
Tax-free childcare is a government scheme that was launched in early 2017. The scheme allows parents to use an online account to put money towards childcare costs, with the government topping it up by 20% – enabling up to an extra £2,000 yearly support per child.
Eligibility Requirements for Tax-Free Childcare:
- You and your partner are employed, this includes self-employed and part-time.
- Your combined annual salary does not exceed £100,000.
- You are not currently receiving support through the existing scheme.
- You and your partner are both over 16.
- You earn at least £115 a week on average.
- If you are under 21 or an apprentice: you must instead expect to earn the equivalent of 16 hours at the national minimum wage rate that applies to you.
All of these conditions apply to both partners, with the exception of single-parent families. Parents will still be eligible for the scheme if they are on maternity, paternity, adoption, paid or statutory leave from work.
Read our previous blog to find out more about the Tax-Free Childcare scheme and its features in further detail.
How Does Tax-Free Childcare Differ To Childcare Vouchers?
The key differences between the two schemes are as follows:
|Tax-Free Childcare||Childcare Vouchers|
|Who can apply?||Anyone can apply for tax-free childcare (including those who are self-employed).
|Childcare vouchers are only available where an employer offers them.
|Minimum earnings to apply||Parents must earn £120 wk minimum to apply. As a couple, both parents must be working.||No minimum earnings to apply. Only one parent needs to work.|
|Maximum age of child to apply||11 or 16 if disabled.||15 or 16 if disabled.|
|Maximum income to apply||The max income limit is £100,000 per parent.
|No income limit.|
Which Scheme Is Best For Me?
The scheme that is best for you will differ dependant on your family’s individual circumstances, Childcare Choices have a calculator on their website which will aid in providing you with this information; this can be found here.
If you find that childcare vouchers are the best option for you, you should make sure you apply before the deadline (this will be March 31st for most organisations), you can do so here.
If you are currently using childcare vouchers, then you will be eligible to carry on using them if:
- You stay with the same employer and they continue to run the scheme.
- You don’t take an unpaid career break for longer than a year.
Need A Hand?
If you have any questions regarding the tax-free childcare scheme or need any help with tax or VAT issues, give one of our friendly team a call on 0117 379 0810.
Latest posts by Steph (see all)
- Reversal of Plan to Scrap Class 2 NICs – What It Means for the Self Employed - October 3, 2018
- First Call Financials New Brand and Identity - July 30, 2018
- Luxury Car Dealer Banned From Running Companies for 13 Years - July 5, 2018