The whole childcare voucher scheme is designed to help working parents, so they are still winning by going to work. There are huge benefits to being aware of what is on offer. In some instances, working parents can save up to £1000 a year on childcare.
In a nutshell:
- The childcare vouchers are made available through a special Government scheme.
- The scheme operates through employers (ranging from small to large companies) who have elected to run a child voucher scheme.
- Access to these vouchers allows you to pay for childcare from pre-tax salary and national insurance income.
- The vouchers are available to parents with children aged up to 15, or those with parental responsibilities for a child living with them.
Example of potential savings on the current childcare voucher scheme:
- Basic-rate (20%) taxpayer: £55/week voucher, with an annual tax saving up to £930
- Higher-rate (40%) taxpayer: £28/week voucher, with an annual tax saving up to £630
- Top-rate (45%) taxpayer: £25/week voucher, with an annual tax saving up to £590
However, a new scheme called the Tax-Free Childcare (TFC) system will be launching in Autumn this year and will replace the current voucher scheme. Rather than being run through employers who opt in, childcare vouchers will be made available online for parents to purchase.
- New changes include that the scheme will be open to millions more people including the self-employed, single parents and couples (who are both in work).
- Some families will better off sticking with the current scheme, whilst for other families it will represent a larger tax saving.
- Parents may able to save up to £2000 per child on childcare costs annually – for every 80p spend on online childcare vouchers, the government will add 20p.
- The scheme will initially cover children up to 5 years but within the first year, this age is expected to support parents with children under 12 years. Disabled children will be covered under the new scheme until they are 16.
- There is no limit on how many children a parent can claim on this new scheme for.
For more details, you can read here. We will keep you updated as more information on the new scheme becomes available.
Whilst the current Childcare Voucher scheme changes in Autumn 2015, parents should still be making the most of this scheme today. Third Door is a registered provider of Childcare and accepts childcare vouchers. We encourage you to ask your employer today if they participate in the current childcare voucher scheme. If not, why not put a case in for them to start – it costs them nothing (in fact, participating can reduce their costs) and you have everything to gain!
Useful links for further information:
- Check out Money Saving Expert’s comprehensive blog for more information on the current scheme here.
- There are several tools that allow you to calculate how much you can save such as Computershare Voucher Services or KiddiVouchers.
- It is also advisable for you to look at what tax credits you may be eligible for. In some cases, families are better off applying for tax credits over childcare vouchers. The government has a “Better Off Calculator” that you may like to use in order to assess what is best for you. You can find that here.
- Calculate what tax credits you are eligible for here. If you are not eligible for tax credits, it is a good idea to start using the childcare vouchers currently available to you.