You could be mistaken for thinking that the current Childcare Voucher scheme has now closed (after all we have been talking about it since 2017 now....) however it has now been extended for new members by another 6 months following a Commons debate, with a revised closing date of October 2018 (exact date still tbc).
The current Childcare Voucher scheme (which means that parents can save up to £933 a year on childcare) was due to close to all new members on 6th April, making way for the new Tax Free Childcare scheme which was launched in April 2017.
So, what’s the difference between them? In short, both schemes reduce the cost of childcare but one scheme may suit an individual’s circumstances better. The most significant difference between the 2 schemes is that Tax-Free Childcare offers savings per child per year, while childcare vouchers offer savings per parent per year.
With childcare vouchers, each parent can take up to £55 each week from their salary before tax and National Insurance, or £243 a month, to spend on childcare no matter how many children they have, as long as the parent is a basic-rate taxpayer and the employer has chosen to run the scheme.
The Tax-Free Childcare initiative however is much more akin to a savings scheme and under the rules parents have 20% of their childcare costs each year met by the Government, up to a limit of £2,000 a year per child (or £4,000 if your child is disabled) The scheme is directly managed by the employee and not the employer and so employees are not restricted based on whether or not their employer runs the scheme.
What do you need to know as an employer? If you don’t offer child care vouchers to your employees you don’t need to do anything! However, if you do offer Child Care vouchers you should be aware of the following:
- Anyone who joins the Childcare Vouchers scheme before the scheme closes can continue to benefit from the savings for as long as their child remains eligible, they must also stay with the same employer, or have received a voucher within the last 12 months;
- Employers will continue to benefit from up to £402/year savings in employer NI for every parent on the scheme;
- Once an employee has left Childcare Vouchers to move to Tax Free Childcare scheme, they cannot rejoin
- Employees can't use both schemes at the same time.
For help or guidance on Child Care Vouchers or any other benefits related query contact us at www.thehrhub.co.uk.
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