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The end of childcare vouchers?

25th May 2017

child with paint on handsTax-Free Childcare is now available to working parents, but it’s not time to say goodbye to childcare vouchers just yet.  Vouchers can help you maximise National Insurance savings.

There are now two ways for working parents to get help with childcare costs; Tax-Free Childcare and childcare vouchers.

Tax-Free Childcare

Tax-Free Childcare is a new scheme for working families with children under 12 (or 17 if disabled).  The scheme has started rolling out for the youngest children and will be extended to older children later in the year.  It will give parents up to £2,000 per child towards childcare costs, or £4,000 if a child is disabled.

Unlike childcare vouchers this scheme isn’t administered by employers so you won’t have to do anything if your employees choose to join.

If, however, an employee joins the Tax-free Childcare scheme and they are in your voucher scheme, they have three months to tell you in writing and they must leave the voucher scheme.

Until October 2018 they can switch back to vouchers if they want to.

Childcare Vouchers

If you currently run a childcare voucher scheme you can continue to accept new employees into this scheme until October 2018; a recent debate in parliment means the government has agreed to extend the original deadline (5th April 2018) for six months.  It is therefore expected that after the 6th October 2018 employees won’t be able to join but those already in the scheme can remain if they stay working for you, but this has yet to be confirmed by parliment.

With the end of childcare vouchers in sight, you might think it’s not worth promoting your current voucher scheme and certainly not worth setting one up if you don’t have one.  But did you know you can use a voucher scheme to maximise your employers’ National Insurance savings between now and April 2018?  Also, if you’re an apprenticeship levy-paying employer, any salary sacrifice will save you 14.3% employers’ NI rather than 13.8%.

Employees can use the Childcare Choices website to find out which works best for them.

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