Deadline extended for childcare voucher registration

The childcare voucher scheme was set to be closed to new entrants from April 2018. However, following a debate in the House of Commons last week Education Secretary Damian Hinds announced that the deadline has been extended by six months, to October 2018. This announcement came as welcome news to many, particularly the 119,000 signatories that petitioned for the scheme to remain open alongside the newly introduced Tax Free Childcare (TFC). Damian Hinds confirmed that the closure of the scheme has been postponed in order for the government ‘to reflect concerns and to allow the bed-in’.

The popular employer-supported childcare voucher scheme was being withdrawn to make way for the new TFC, which was introduced in April 2017. The extension to the deadline means that parents now have a further six months to work out which childcare funding route is best for them and to claim either childcare vouchers or TFC. Before the announcement last week, parents who had not signed up for the childcare voucher scheme by April 2018 would not have been able to claim them in future. Parents who had already signed up for the scheme could continue to receive childcare vouchers until they changed employer, so long as their current employer continued to offer the scheme.

The government offers a Childcare calculator which enables parents to see which option is best for their personal circumstances, however many hope that this extension signals the possibility that both schemes will be kept open side by side indefinitely.

A very brief summary of the two schemes are below:-

Childcare vouchers

• Child care vouchers can be paid tax and NI free from employers and are therefore usually offered through a salary sacrifice scheme. A basic rate tax payer can receive up to £243 a month in child care vouchers, higher rate tax payers can receive up to £124 and additional rate tax payers £110.
• Available to use for children up to the age of 15
• It is only available to employees whose employers offer the scheme; it is not available to the self employed
• There is no upper earnings limit, however parents must earn above the national minimum wage once the vouchers have been deducted through the salary sacrifice scheme
• It is available if only one parent is working

Tax Free Childcare (TFC)

• Works similar to a savings account. The government will top up 20p for every 80p parents pay in, up to a maximum of £2,000 per child per year (or £4,000 for a disabled child)
• Available for children up to the age of 12 (or 17 for a disabled child)
• Is available to the self employed and does not rely on employers to offer it
• Parents need to work at least 16 hours and earn at least £120 a week, but not more than £100,000 a year in order to qualify.
• If there are two parents, both will need to work to qualify

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