Hurry! Time Is Running Out To Take Advantage Of The Childcare Voucher Scheme
in April 2018, the Government Childcare Voucher Scheme extended its joining-date deadline for new members by another six months.
The initiative, which allows parents to save up to £933 a year on childcare, was supposed to be closed to new members in April 2018, making way for last year’s newly launched “Tax-Free Childcare” scheme.
The good news is that the current Childcare Voucher Scheme is available until 4th October 2018. After this date, employees will no longer be able to join this scheme.
The bad news is there is just one month until the old scheme will be closed, so I would recommend that small businesses encourage employees to join this scheme RIGHT NOW!
If you or your employees are members of the current Childcare Voucher Scheme, then you need to be aware of the changes from 4 October 2018.
Summary Of Changes To The Childcare Voucher Scheme:
- The Childcare Voucher Scheme will no longer be available to new applicants after 4th October 2018.
- A new scheme ‘Tax-Free Childcare’ is now available, subject to eligibility.
- Existing membership of the Childcare Voucher Scheme will continue as long as your situation does not change. For example, if you leave your current employer or choose to take up the ‘Tax-Free Childcare’ scheme, you will no longer be eligible for Vouchers.
What Is The Existing Childcare Voucher Scheme?
You can take up to £55 a week of your wages as childcare vouchers, which you do not pay tax or National Insurance on. The amount of vouchers available depends on how much you earn and when you joined the scheme.
There is no deadline for using vouchers, you can continue to use any vouchers you already have, and can make a joint payment for childcare with ‘Tax-Free Childcare.’
What is ‘Tax-Free Childcare’?
You can get up to £500 every three months (£2,000 a year) for each of your children to help with the costs of childcare. The government will pay £2 for every £8 you pay your childcare provider via a ‘Tax-Free Childcare’ online account.
You can use it to pay for approved childcare and – if you’re eligible for both – can receive both ‘Tax-Free Childcare’ and 30 hours free childcare.
Your eligibility for Tax-Free Childcare is dependent on the following criteria for:
- You and your partner
- Your child and
- Your childcare provider
If you successfully apply for ‘Tax-Free Childcare’ you cannot continue to claim childcare vouchers.
Employees must notify their employers of changes within 90 days.
Why Your Employees Should Sign-Up For Childcare Voucher Scheme Today!
If your employees stay on the old Childcare Voucher scheme, this will be better for you in terms of tax breaks as it allows you to reduce the amount of NI and tax you pay, but the new Tax-Free Childcare scheme will not. Therefore, you really should be encouraging working parents on your team to sign up before 4th October 2018.
On the current voucher scheme, both employer and employee pay less in NI and tax contributions, so this scheme will benefit you both – so if you have employees with children it is a good idea to make them aware of this scheme as soon as possible if they don’t already know about it so that they can take advantage.
Unfortunately, with the new scheme, employers are not able to claim anything back if an employee opts-in to it, but it would be good practice to make sure that your employee is also aware of the new scheme as an option as there are benefits that might suit them better. For example, for any single parents, other family members are also able to opt in for that child.
Make sure you get your employees to use this great employee benefit.
Still confused? Give me a call and we can talk you through the current Childcare Voucher Scheme and the new Tax-Free Childcare.
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