Parents, the deadline is fast approaching; from Thursday 4th October 2018, Childcare Voucher Schemes will close to all new entrants. Instead, the Government is offering ‘Tax Free Childcare’, giving eligible parents an extra £2 for every £8 they pay in childcare.
As you may have seen back in March, the initial deadline of April 6th was extended by six months. With that window closing in just a few weeks’ time, here are a few things you need to be aware of:
Childcare Vouchers & Tax Free Childcare – What’s What?
As it stands, you can claim up to £55 a week from your wages as childcare vouchers; this is dependent on both the amount you earn, and when you joined the scheme. The vouchers are taken from your gross salary, before the subtraction of any tax or NICs.
Crucially, all new entrants to Childcare Voucher Schemes must have salary sacrificed from this month’s (September 2018) pay check. So, if you’re not a member but you’d still like to join a scheme, contact your company’s HR/Payroll department as soon as possible and find out when your September 2018 payroll cut-off date is. Unfortunately for some, this may already have passed, but for those who are already enrolled, the scheme will continue to be available for use beyond October 4th.
If, however, you’ve already missed the deadline, don’t worry. You may well be eligible for Tax Free Childcare instead. Unlike Childcare Vouchers, Tax Free Childcare is based on saving per child, rather than per parent. It works like this:
- The parent opens an online account and pays money into it.
- The Government then tops that account up additionally with 20% of the total cost of childcare (up to £2,000 per child, per year).
The great thing is, it’s not just parents who can contribute to the account. If grandparents or close friends would like to help towards the increasing cost of childcare, they can do so by depositing money into the account themselves. Also, for those eligible, Tax Free Childcare is available in addition to the 30 hours of free childcare that you may already receive.
What It All Means For You & Your Child
As Childcare Vouchers are administered by an employer via PAYE, many self-employed people have unfortunately missed out. However, for those working through an Umbrella Company, or via their own limited company, there is still time to benefit from the vouchers.
Likewise, as it’s open until October 4th, an employer can set up an account now and offer a scheme to eligible employees. The vouchers have no maximum income limit. So, if you’re a high earner, it’s still worth looking into whether you’re eligible for a Childcare Voucher Scheme.
Next Steps Moving Forward
But what about those parents who are uncertain as to which scheme they’d be better off applying for? Well, it all depends on your personal circumstances. Using the Government’s ‘childcare calculator’, you can establish which type of support would work best for you and your family.
So, if you’re uncertain about eligibility, or anything else regarding the closure of the Childcare Voucher Scheme, check out these handy FAQs – put together by Employers For Childcare.
For our existing Umbrella employees, your dedicated Payroll team are on hand to provide guidance and support relating to both our current Childcare Voucher Scheme, and the 4th October deadline.