What is happening to the Childcare Voucher Scheme?
During 2017 a new government childcare voucher scheme is being rolled out gradually across the UK. It offers another way for some parents to claim reductions on OFSTED registered childcare. The new childcare voucher scheme will eventually replace the current employer scheme administered by childcare voucher providers, such as Edenred.
Families on current childcare vouchers can continue to buy them via their employer with the salary sacrifice system. New signups to the employer’s childcare voucher scheme are continuing until April 2018 and then you will be able to continue using these childcare vouchers until your child reaches 15 years of age. You will need to register on the scheme and receive a voucher by 5 April 2018. It could be important for parents to sign up for this current scheme before then, as for many it will be beneficial to be on the old voucher system. The new childcare voucher scheme will be a bonus for some, including the self-employed who will now be able to claim.
What is the new government childcare voucher scheme?
The new government run childcare voucher scheme starts during 2017, allowing working parents savings of up to £2,000 per child each year. There are some more stipulations to this scheme which includes both parents working over 16 hours a week each. It works very differently to the current salary sacrifice scheme where you must claim vouchers through your employer.
The new government scheme requires parents to set up a dedicated account to pay into for each child. The government will then top up an extra 20 pence for every 80 pence paid in, up to £2,000 worth of childcare savings. This, funnily enough, is the same as the basic tax rate. The childcare fund can then be spent with any OFSTED registered providers, including Smithbrook Tuition.
Childcare voucher eligibility
The eligibility requirements for the new government childcare vouchers scheme seem to be a little more stringent than the previous system. Firstly, both parents must be employed, working at least 16 hours a week with a maximum salary of £100,000. Single parents will also be able to join the scheme.
Children must now be under the age of 12 to benefit and can not be using the current salary sacrifice scheme at the same time. Parents claiming tax credits will not be eligible.
The current salary sacrifice scheme will open for new applicants until April 2018 and if you are using this system you can continue to buy the vouchers until your child reaches 15 years of age. This makes it very important to sign up for this system by April 2018 enabiling you to choose which system will be more beneficial.
How to get the new government childcare vouchers
The new scheme is administered via the government website. Parents must create an online account for each child, on the government website, where they must make contributions that will then be topped up by the government.
If you want to use the current salary sacrifice scheme, this is done by your employer. Ask them if you can join their scheme and to set it up for you. This will allow you to buy childcare vouchers, through your salary, before tax. Do not over buy vouchers as they are non-refundable.
Which childcare voucher scheme is best for you?
The new scheme will be beneficial to working single parents who have childcare costs over £5,000 a year and working couples who have childcare costs of over £9,500 a year along with self-employed parents.
Some families will benefit massively by using the current salary sacrifice scheme; for example, if you are a two-parent family where one parent does not work, a family with part-time childcare costs or a family where one parent earns over £100,000 a year. Employers will be losing out on the new system as they will not save money through lower national insurance payments.
Read this pdf to find out the crucial differences between the schemes.
http://www.childcarevouchers.co.uk/documents/ccv_whatshappening_2017.pdf
Try this childcare voucher calculator to help make a decision https://www.gov.uk/childcare-vouchers-better-off-calculator
Childcare vouchers at Smithbrook Tuition
Smithbrook Tuition is an OFSTED registered childcare provider and therefore will continue to accept vouchers from both systems. We urge parents to check if they are eligible for childcare voucher schemes, and which will be the most cost effective for their families.
If you have any questions feel free to contact us and we can offer some information to help you decide how you should proceed in the future, to ensure your child receives high-quality childcare that will help their education.