As of 4th October 2018, the employer led childcare voucher scheme will no longer be available to new applicants.

The government has replaced it with a tax free online voucher scheme which will be the only childcare funding option available to new joiners from the October deadline.  Read on for everything you need to know regarding the new scheme and how to prepare for it.

Childcare vouchers are a government approved, tax efficient way of paying for childcare.  If you are currently in the scheme you can exchange up to £243 a month of your gross salary for childcare vouchers. As this is part of your gross salary you are exchanging for vouchers, it is tax free and exempt from National Insurance, which means savings of up to £933 per parent a year, and if both parents claim, they can save up to £1866.

The new scheme is open to all eligible parents and requires them to pay into an online HMRC website account and for every 80p an eligible employees pays in, the government will contribute 20p, up to £2,000 a year, per child.  The scheme was introduced to ensure working parents receive a guaranteed amount of childcare support, as opposed to the current employer led scheme which was a non-compulsory initiative and not offered by all employers.

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Employees eligible for tax free childcare must:

  • Have one or more child under the age of 12 when the new scheme started in April 2018. The maximum age to claim for childcare is 12.
  • Be earning a minimum of £115 per week and both parents need to be working.
  • Work a minimum of 16 hours a week.
  • Parents must earn less than £100,000 a year.

If you are an employer currently running the old voucher scheme you will continue to provide this and can offer to any employee as long as the application is processed and confirmed before the October 4th deadline.

After this deadline no employee can join the old scheme.

If an employee wishes to switch to the new tax-free childcare scheme, they will no longer be entitled to receive any additional vouchers from their employers.

If you would like some HR guidance on childcare vouchers and how to support your employees ahead of October’s deadline get in touch today.