Tax-Free Childcare scheme vs Childcare Voucher scheme

10th April 2017

On 28 April 2017 we finally see the introduction of the Tax-Free Childcare scheme aimed at helping working parents with the cost of childcare. This scheme is set to replace the existing Childcare Voucher scheme.

However, working parents will be able to join the Childcare Voucher scheme until April 2018 and can continue on the scheme, for as long as their employer continues to run the scheme or until their child is 15 years old (whichever comes first).

Under the Tax-Free Childcare scheme, for eligible parents and children, every £8 a parent pays in, the government will pay in an extra £2 and parents can receive up to £2,000 per child, per year, towards their childcare costs. Whereas, under the Childcare Voucher scheme the maximum saving per annum is £933 per parent.

However, under the Childcare Voucher scheme, if you spend £100 on childcare you could save £32 / 32% (based on a basic rate taxpayer). Whereas under the Tax-Free Childcare scheme, if you spend £100 on childcare you could save £20 / 20% (based on a basic rate taxpayer). 

It is therefore important to consider your personal circumstances before making a decision on which scheme is best for you, as the incorrect decision could be very costly.

If you would like to discuss your position in more detail, please contact your adviser.

Luke Thomas | Plus Accounting | Brighton

Luke Thomas, Director - Blog Author 


Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. 

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