The Childcare Voucher scheme is coming to an end in April 2018, making way to the Tax-Free Childcare scheme. While this isn’t a huge problem for many, it won’t be better for everyone, as some people who are eligible would benefit more overall from Childcare Vouchers. Would you benefit more from signing up to the new scheme, staying with vouchers, or signing up to vouchers before it ends?
Who Benefits more from Childcare Vouchers?
- If you are part of a couple and only one parent is employed, as both parents must be employed to benefit from Tax-Free Childcare.
- Parents with only a single child, as lower childcare costs save more from this scheme, as long as your total childcare costs are less than a value which varies based on your tax-paying rate.
- Anyone who earns £100,000 or more, as they aren’t eligible for the Tax-Free Childcare scheme.
Who Benefits more from Tax-Free Childcare?
- Self-employed people or couples who both earn, but earn less than £100,000+ each, as they aren’t eligible for Childcare Vouchers.
- Parents with more than one child, as the help available increases with the number of children you have, where as Childcare Vouchers are limited regardless of how many children you have.
What if Tax-Free Childcare is better for you?
If you already claim Childcare Vouchers, you need to provide your employer written notice that you want to permanently leave the voucher scheme, and you need to do this within 3 months of signing up for the Tax-Free Childcare scheme.
If you aren’t signed up to any scheme, you simply need to sign up to the new scheme. Parents with older children might want to look into Childcare Vouchers in the meantime as the new scheme will be rolled out to parents with older children first.
What if Childcare Vouchers are better for you?
If you are already signed up to Childcare Vouchers, you can continue to claim them until your employer stops offering them or you change jobs.
If you aren’t signed up to any scheme, you will need to sign up before the end date in April 2018. However, to do this your employer must be offering this scheme. If your employer doesn’t offer this scheme you will need to try to persuade them but as there is less than two years for this scheme to run, it will probably be a hard sell to get them to put in the effort to make changes to the payroll.
For more information about the changes with Childcare Vouchers, check out this link to a fuller breakdown at moneysavingexpert.com.