Tax-Free Childcare to Replace Childcare Vouchers

By Tricia

March 2018

March 2018

By Tricia

The government have announced a major shake-up of the Childcare Voucher system. From April onwards, childcare vouchers will close to new applicants and will be replaced by the government’s tax-free childcare scheme which is worth up to £2,000 a year to eligible parents.

The childcare vouchers scheme was only available to parents who had been offered them through the business they worked for, so if parents worked for a business that didn’t offer the scheme they would miss out. The new scheme is intended to help more parents with young children in the hair and beauty industry return to work.

To qualify for tax-free childcare each parent must be:

  • Over 21 and working
  • Each earning an average of at least £120 per week
  • Employed or self-employed

A parent may also be eligible if they have a partner who gets benefits such as the Carer’s Allowance, Employment and Support Allowance or Incapacity Benefit.

Eligible parents of a child under the age of 12 (or 17 if disabled) can open and pay money into an online account to cover the cost of childcare with a registered provider. The government makes a 20% contribution to childcare, so for every £8 paid into the account, the government adds an extra £2 (up to £2,000 per child or £4,000 if disabled).

Further help is available for eligible parents of three to four-year old’s in England where a total of 30 hours of free childcare has been available since September 2017.  There are similar schemes in Scotland, Wales and Northern Ireland, but the number of hours is different in each nation.  The eligibility criteria are the same as for the tax-free childcare accounts.

For further information in England on the tax-free childcare scheme, please visit: https://www.gov.uk/help-with-childcare-costs/tax-free-childcare

For information on childcare funding in Scotland, visit: https://www.mygov.scot/childcare-costs-help/funded-early-learning-and-childcare/