Are your employees aware of the changes to the Childcare Voucher scheme?

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Author: By Louise Blair, Head of HR at Foster DenovoPosted: 12th March 2018

Childcare vouchers represent a good saving for working parents and it’s, therefore, perceived as a great benefit by employees who have young children.

As you may be aware, the Childcare Voucher scheme was supposed to be closed to new joiners from 6th April 2018, as the government planned to launch the new Tax-Free Childcare. However, it was confirmed at the House of Commons yesterday (Tuesday 13 March 2018) that the April deadline for the abolition of employer-supported childcare vouchers would be extended for a further six months.

The new scheme will replace the current one and will provide eligible families (if a couple then both parents must work) with an extra 20% towards childcare costs of up to £10,000 a year. So basically, the government will contribute £2 for every £8 that parents pay to approved childcare providers and this will be done via an online account. This means they could get up to £2000 a year for each child. 

Parents are not allowed to take advantage of both schemes at the same time. 

Vouchers can be used at any Ofsted regulated childcare in England and the equivalent bodies in Scotland, Wales and Northern Ireland.

But what does it mean for employers like yourself? 

If you offer the scheme as a benefit, there will be no changes to employees who are already in the scheme or will receive their first vouchers on or before the new Tax-Free Childcare is in place, which is expected to be around October 2018. This means they will still benefit from saving tax and national insurance for as long as they stay with your organisation and their child is still eligible. 

As an employer, you will also continue to benefit from savings in national insurance for every employee that stays on your scheme.

How can you help employees decide which scheme is better for them?

The new scheme could work out better for some people but not so much for others; it all depends on their individual circumstances. So it’s important that you communicate the pros and cons of each scheme clearly, using a multi-channel approach.

The government website has created a handy childcare vouchers calculator where parents can find out how much they could get in the new scheme. Make sure you share this with your employees as it can help them decide if they would be better off staying with childcare vouchers or changing to the new Tax-Free Childcare. Here is the link: You can also point them to find out more about the new scheme and eligibility on the government website.