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Childcare vouchers are changing in April - all you need to know ahead of the deadline

Find out what the changes mean for you and your family

Chloe Best
Lifestyle Features Editor
12 March 2018
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The government is set to bring the Childcare Vouchers scheme to an end in April 2018, meaning that parents will no longer be able to join the scheme through their employer. However, parents will still be able to claim support via the Tax-free Childcare scheme, which could help save up to £2,000 a year on childcare costs. Find out what the changes could mean for you and your family with our need-to-know guide ahead of the April deadline.

What is the Childcare Vouchers scheme?

This workplace benefit allows parents to buy childcare vouchers through a salary sacrifice of up to £55 per week, depending on their tax band. To use the scheme, parents can give up a certain amount of their pre-tax salary and save on tax by claiming it in vouchers instead. This means they can save up to £933 a year each on money that would normally be paid as tax and national insurance.

child at nursery© Photo: iStock

What is Tax-free Childcare?

Tax-Free Childcare means that up to £2,000 will be put towards childcare costs for each child up to the age of 12. For each 80p you pay in childcare, the government will add another 20p – up to £10,000 of spending. The scheme is available for children up to the age of 12, and the tax relief is doubled for children with disabilities.

MORE: Tax-free childcare is now open to all parents with children under 12

What is the difference between Childcare Vouchers and Tax-free Childcare?

There are a few key differences between the two schemes; while childcare vouchers are available to parents with children up to the age of 15, the Tax-free childcare scheme is capped for children up to 12, rising to the age of 17 where the child has a disability.

children at nursery© Photo: iStock

Meanwhile, although the childcare vouchers scheme is limited to people whose employers offer it, the new tax-free childcare scheme is open to anyone who qualifies, including self-employed parents. There is also a big difference in the amount that parents could be entitled to receive through each scheme. Through the current vouchers scheme, the maximum payout is £933 per year. However, with Tax-free Childcare, parents could claim up to £2,000 a year - although this is based on them spending £8,000 on nursery costs.

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Who is eligible for Tax-free Childcare?

To qualify, parents will have to be employed, both adults must be earning at least £115 per week and not more than £100,000 per year, and live in England. Although both parents must be working to be eligible for the scheme, those who are temporarily absent from work such as on maternity, paternity or adoption leave are still eligible. Parents who already receive Employer-Supported Childcare are not available to receive the new Tax-Free Childcare funding.

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