On the 13 March the government announced that the childcare vouchers scheme will remain open to new entrants for a further six months, which means it will now close in October 2018 to new entrants rather than the planned 6 April deadline.
It is closing as the government have launched a new scheme called Tax-Free Childcare (TFC) which changes the package of financial support it offers. Parents and guardians will need to find out if they will still qualify for support under the new scheme and if they will be better off or not with Childcare Vouchers or TFC. They will need to make a choice between the two schemes as you cannot be a member of both. From October, new applicants will not be able to join the old scheme, existing members will be able to continue for as long as their employer runs the scheme (or as long as they remain employed with this employer).
Childcare vouchers are only available via employers who are signed up to the scheme. It is an attractive benefit to employees who are parents or guardians, as it can save those with children aged up to 15, over £1000 a year on childcare.
It allows these parents or guardians to pay for childcare out of their pre-tax and national income. On the whole it works as a salary sacrifice (a few employers give the vouchers on top of the normal salary).
The vouchers don’t cost an employer money if they operate the scheme themselves. If an employer uses an external company to provide the administration of the vouchers, the fee should be less than what you gain in National Insurance. In fact, employers don’t pay national insurance on the portion of tax that employees use for vouchers, so can reduce costs.
Vouchers can be used for a variety of sources of childcare, the provider must be regulated, for example, a nursery, nanny or childminder need to be Ofsted registered. They can even be used for Ofsted registered tuition, although you would need to check in advance that they are happy to accept vouchers.
For further information visit the government website on childcare or their website childcare choices.