Childcare Vouchers Are Closing – Don’t Miss Out!

The Childcare Voucher Scheme is due to close following the introduction of a new scheme. Although the original deadline was 6th April 2018, it was announced that parents will be given an extra six months to join the Childcare Voucher Scheme, which allows you to save money on childcare by paying for it from your gross salary, before tax. Those who are already signed up for Childcare Vouchers can continue to use them, but they will be closed to new entrants.

Childcare Vouchers will be replaced by Tax Free Childcare, which gives eligible parents an extra 20p on top of every 80p they pay in for childcare.

Am I Eligible for Tax Free Childcare?

To be eligible for the new scheme, you must have children under 12 (under 17 if disabled) and you and your partner must both earn on average at least £120 per week. You won’t be eligible if either of you earn more than £100,000 a year.

How Does Tax Free Childcare Work?

Eligible parents can open an online account which they pay into; the government will then top up the account with 20% of the childcare cost, up to a total of £2000 per child per year. Unlike Childcare Vouchers, TFC is based on a saving for each child, rather than for each parent.

Money can be paid into the account by other family members too, so if grandparents wish to help towards the cost of childcare, they can.

Which Scheme Should I Use?

If you’re a high earner and you can’t use Tax Free Childcare, you’ll need to sign up to Childcare Vouchers, which have no income limit, while you still can.  Tax Free Childcare is also unavailable to those who claim childcare tax credits or universal credit.

Remember, if you switch jobs, your new employer can’t add you to the Childcare Voucher Scheme once it closes for new entrants, so you’d have to apply for Tax Free Childcare instead. The introduction of Tax Free Childcare should also be welcome news if your employer doesn’t offer Childcare Vouchers, and you’ve previously missed out.

If you have the choice between the two schemes, it’s important to check which scheme will give you the better result financially. Because TFC is based on each child, if you have a large family, you may find you’re better off on this scheme. However, to find out what’s right for you, take a look at the Government’s calculator here.

Don’t Miss Out on Childcare Vouchers

Because Childcare Vouchers are administered by the employer via PAYE, many self-employed workers miss out.

However, those working through an umbrella company or via their own limited company can still benefit from the vouchers, which allow each parent to contribute up to £243 a month towards childcare from their gross salary.

Get in touch to find out how contractors can benefit from this tax saving, or find out more about your childcare options here.

Blog written by
Sam Wright
Marketing Manager at

Sam Wright is Danbro’s Marketing Manager. He produces regular content and feature articles on our digital and non-digital channels – and social platforms – for the Danbro Group and its subsidiaries, as well as having responsibility for the Company’s internal and external communications.

His background is in Journalism and Creative Writing, having previously contributed to publications such as The Daily Post, The Lancashire Evening Post, and The Blackpool Gazette.

He is a keen swimmer and avid Manchester United fan (but don’t hold that against him), and he lives in Lancashire with his wife, Sarah.

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