Childcare Vouchers

Jan 18, 2018

Childcare Vouchers

Using Government childcare vouchers to pay for childcare can save parent thousands of pounds a year. The scheme is operated by employers and allows childcare to be paid for from pre-tax salary.

Basic rate taxpayers can buy up to £55/week voucher, generating a maximum annual tax/National Insurance saving of £930. This is per parent, and is not affected by the number of children you have.  For higher rate taxpayers the annual saving is £630 and for Top rate tax payers, the figure is £590.

The current scheme “Childcare Vouchers” is closing to new applicants from April 2018 and a new scheme Tax Free Childcare is being introduced.

The new scheme, launched in April 2017 gives eligible families an extra 20% towards childcare costs. In total families can use the scheme to pay for up to £10,000 per child each year, so eligible families could receive up to £2000 per child towards childcare costs.

A simple comparison of the two schemes was conducted by moneysavingexpert.com and they conclude that there will be winners and losers depending on your own circumstances.

https://www.moneysavingexpert.com/family/childcare-vouchers

In general terms:

Tax-Free Childcare is best suited to:

  • Self-employed people or couples who earn less than £100,000 each
  • Parents with more than one child and high childcare costs

Childcare Vouchers are best suited to:

  • Couples where one parent doesn’t work
  • Basic-rate taxpayer parents with total childcare costs of £9,336 or less
  • Higher-rate taxpayer parents with total childcare costs of £6,252 or less
  • Higher earners, earning £100,000+ (or in a couple where one earns £100,000+) as they are eligible for Childcare Vouchers but cannot participate in the Tax-Free Childcare scheme.

If you would like to speak to us about your own circumstances, please do get in touch.

More posts you might like

Inheritance Tax on Private Sector Businesses

Inheritance Tax on Private Sector Businesses

Craig Simpson, Tax Partner at Bates Weston highlights the impact of the changes to Inheritance tax on business and agricultural assets on privately owned businesses as well as the farming community.

read more
Payroll Assistant Vacancy

Payroll Assistant Vacancy

Are you an experienced payroll professional looking for an exciting opportunity to work within a thriving accountancy firm in the heart of Derby City? We have a vacancy for a payroll assistant.

read more
Graduate Trainee Accountants

Graduate Trainee Accountants

Our Graduate Trainee Accountants programme is now open. If you are graduating in 2025 and are interested in becoming a qualified Chartered Accountant, take a look at our website and apply now.

read more
Xero Platinum partner logo
ICAEW logo

Looking to grow? Take the next step

From compliance to growth, our accounting firm in Derby has you covered. Call us to see how we can help.

Got a query?
We’re here to help – just ask