New scheme delayed to 2017
Understand what’s changing with the Voucher Scheme so you don’t miss out
Parents could soon find themselves over £900 a year worse off because of changes to how the government helps them pay for childcare. Here at Stepping Stones we want to help you to understand the changes so that you can act now and avoid missing out.
At the moment, a parent can join their employer’s childcare voucher scheme, saving them up to £933 a year on childcare costs and up to £1866 if both parents are working. This contribution is tax & National Insurance free. This is where things are going to change.
The childcare voucher scheme was set to be replaced this autumn with a new government system. However a legal challenge was brought against the government’s decision to deliver the new Tax Free Childcare accounts through HMRC working in partnership with National Savings & Investments.
Several organisations involved in the existing Employer-Supported Childcare scheme (childcare vouchers) challenged the decision and in doing so the launch of the new system has been delayed until early 2017.
The new Tax Free Childcare or TFC will involve parents paying into an account and for every 80p they put in the government will contribute 20p. This works out to a potential saving of up to £2000 per year, however there will be stricter eligibility criteria with some families missing out i.e. one parent working families and the tax & National Insurance saving will also be lost.
Once TFC launches, if parents aren’t in their employer’s childcare voucher scheme they lose the right to join it, even if it could save them more money. If a parent is already enrolled then they can remain in the scheme for as long as they need to until their eligibility ceases on one of the four following grounds:
- They change employer
- Their child reached its 15th birthday (16 for registered disabled)
- They do not receive childcare vouchers within a 12 month period
- They complete the exit form and open up a TFC account with National Savings & Investments
In order to make the most of the current Childcare voucher schemes and delay in launch of the TFC we suggest that you speak to your employer about joining their scheme. If your employer does not offer a scheme then please contact us here at Stepping Stones for more information.