As you may be aware, there are changes happening in childcare funding as the Government is set to launch their Tax-free Childcare scheme. The Government were originally planning to launch their new Tax-free Childcare scheme in the autumn; however, the scheme will now be launched in 2017. Therefore, you now have more time to make savings on your National Insurance contributions.

Parents who use your Childcare Voucher scheme now have more time to save on their childcare costs. In addition, any of your employees who have children in 2015 and 2016 will be eligible for your Childcare Voucher scheme.

What is the difference between the two schemes?

  • To get the maximum saving of £2000 per child using Tax-free Childcare, each parent will need to be spending £10,000 per child each year.
  • To get the maximum saving of £933 per parent, each parent will only need to outlay £2,916 each year
  • Both parents can use Childcare Vouchers, doubling their savings to £1,866

Due to eligibility criteria, many parents will be better off on Childcare Vouchers including;

  • Middle-low earning parents
  • Families where only one parent works
  • Families only one parent works
  • Families only using childcare for a few hours per week
  • Families using childcare for children over the age of 12

Tax-free Childcare will see the Government subsidising 20% of a child’s childcare on costs of up to £10,000 per year, providing savings of up to £2,000 per child. Parents will pay into an account when they are using childcare and the government will add the additional 20%. At first glance, this new scheme can look very appealing but in reality, many parents are better off on Childcare Vouchers. This is even more reason to promote your Childcare Voucher scheme to ensure all eligible employees can join and start saving now.

Furthermore, many parents will see their childcare costs decrease in 2016 as the Government will be introducing 30 hours free childcare for 3 and 4 year olds in households where both parents work. This will lead to many more parents being financially better off on Childcare Vouchers as opposed to on Tax-free Childcare.

Petaurum Solutions Comment

As the new childcare scheme nears, we are here to provide you with the support and guidance to ensure you make an informed decision around what scheme would be the most beneficial for your employees.

If you would like any help or advice on what you need to do now and when Tax-free Childcare is implemented or would like more information on our other innovative low cost ways to ensure your employees money goes that little bit further then why not give us a call

We would like to thank our Childcare Partner Busy Bees for the above article 

This information is intended as a general overview and discussion of the subjects dealt with. The information provided here was accurate as of the day it was posted; however, the law may have changed since that date. This information is not intended to be, and should not be used as, a substitute for taking legal, HR or benefits advice in any specific situation. Petaurum Solutions is not responsible for any actions taken or not taken on the basis of this information. Please refer to the full terms and conditions on our website.

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