The childcare voucher scheme closes to new members from the 5th April. Parents must therefore decide whether they would be better off using childcare vouchers or the Tax-Free Childcare scheme – they are not allowed to use both.
Money Saving Expert Martin Lewis appeared on ITV’s This Morning to warn that if parents would like to start using childcare vouchers, they would need to notify their payroll department either today or tomorrow in order to be accepted before the scheme closes.
After the 5th April, new parents will not be allowed to join the childcare voucher scheme. To be classed as a new member, parents need to have actually received the vouchers. However, this can take some employers up to a month to process, so if parents feel this scheme is right for them, they need to let their payroll department know straightaway.
What is the difference between the two schemes?
Tax-Free Childcare was introduced last April. For every £8 parents pay into their Childcare Choices account, the Government adds £2, up to a maximum contribution of £2,000 per child per year. It covers parents with children under 12 (or 17 if disabled).
Childcare vouchers work through salary sacrifice, where a parent would give up a portion of their salary in return for the equivalent in vouchers. However, as there is no tax or national insurance to pay, childcare vouchers will always equate to more than the amount of salary originally sacrificed. Savings can be made of up to £933 per parent, per year. The scheme covers parents with children under 16 (or 17 if disabled).
Do parents have a choice of joining either scheme?
Each scheme has its own eligibility criteria, therefore some parents may qualify for one scheme but not the other. In addition to this, not all employers offer childcare vouchers to their staff, so this may not be an option for some parents.
Parents can find out which scheme would be best suited to their needs by visiting www.childcarechoices.gov.uk