New Tax-free Childcare Vouchers Scheme to launch

From April, the Childcare Voucher Scheme will be closing to new applicants and it’ll be replaced by Tax-Free Childcare

Under the new scheme, rather than having a tax-free allowance for childcare, eligible families will get 20% of their annual childcare costs (up to £2,000) paid for by the government.

Under the current scheme, working parents whose employer is signed up can take up to £55 a week of their wages as childcare vouchers, which they don’t pay tax or National Insurance on.

How much you can take depends on the amount you earn and when you joined the scheme.

However, if you worked for a business that wasn’t part of the scheme or were self-employed, you missed out.

With the new scheme, the government will pay £2 for every £8 you pay your childcare provider, via an online ‘Childcare Account’.

You can get up to £500 every three months (£2,000 a year) for each of your children to help with the costs of childcare.

You can use the money in your Tax-free Childcare Account to pay up to 10 childcare providers directly.

It is thought the Tax-free Childcare system is better for those who are self-employed, as well as couples who have more than one child and therefore may have high childcare costs. It’s also better for those who earn less than £100,000.

The old scheme is likely to be better for couples with fewer children, where one parent doesn’t work or where one parent earns more than £100,000 a year.

If you currently get childcare vouchers, you’ll be able to continue to get them for as long as your employer runs the scheme, or as long as you stay with your employer. And you can still apply for this scheme before 6th April 2018.