If you operated a childcare voucher scheme, you would have been under the impression that it would be closed to new entrants from April 2018, with the introduction of the new government tax-free childcare system.
We all thought that, but at the last minute the government has taken the decision to extend the voucher scheme to new entrants for another six months.
The current employer-operated scheme, which enables working parents to fund childcare through their pre-taxed salary with weekly vouchers worth up to £55, was due to close to new entrants in April this year.
An alternative government-backed tax-free childcare scheme, set to replace the voucher system, is already operational. But since its launch in 2017, the scheme has experienced lots of problems and has faced criticism from those who are concerned it will force parents to pay childcare costs up front.
Under the new system, working parents – including those with self-employed status – who are earning more than £120 per week but less than £100,000 a year will receive government top-up contributions to help meet up to £10,000 a year of childcare costs for every child under 12 years.
For every £8 contributed by parents, the government will add £2, amounting to an extra £2,000 per child or £4,000 if the child is disabled.
The fact that the two different schemes are both operational may cause a few headaches for your payroll team if you have people using both, and it is not yet clear whether the voucher scheme will get another extension or not. If you want more information about the tax-free scheme for your employees see https://www.gov.uk/help-with-childcare-costs/tax-free-childcare