Childcare vouchers replaced by tax-free childcare: the NHBF highlights the benefits for working parents

From 6 April 2018, 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 per year to eligible parents.  

To qualify each parent must be:

• over 21 and working;
• each earning an average of at least £120 per week
• and can be employed or self-employed. 

although a parent may also be eligible if they have a partner who gets benefits such as Carers Allowance, Employment and Support Allowance or Incapacity Benefit.    

How tax-free childcare works

Eligible parents of a child under the age of 12 (or 17 if disabled) can open an online account which they then pay into 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). 

30 hours of free childcare 

Further help is available for eligible parents of 3 and 4 year olds 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.

The NHBF’s CEO, Hilary Hall comments:

“The childcare vouchers were 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 then they would miss out.  The newer childcare schemes will really help stylists, barbers and beauty therapists with young children return to work.  However, early years providers don’t have to offer the 30 hours of free childcare.  And because the funding is so tight, many childcare providers are charging for extra services such as meals, pick-ups or drop-offs, so your 30 hours may not always be completely free.”