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Some of our clients help out their employees with childcare costs using the Childcare Voucher scheme (Employer Supported Childcare). Childcare vouchers are good because they come out of pre tax salary (so there can be NI savings as well as tax) but the scheme was expected to close on 6 April 2018. It has now been extended so that employees can still join the scheme for the next six months.
There has recently been the roll out of “Tax Free Childcare”, the new government scheme designed to help working parents. Tax free is a bit of a misnomer – the Government effectively contributes 20% up to £2000. You can see details and work out what you might be entitled to here:
Your employees already using the Childcare Voucher scheme can choose whether to stay in it or switch to Tax Free Childcare, but parents cannot be in both at the same time.
As with anything, it is swings and roundabouts. For example Tax Free Childcare is clearly better if you are self-employed – you can only get the Childcare Vouchers if your employer offers them. But Childcare Vouchers win if one parent doesn’t work, and the other parent can get the vouchers from their employer.
There is a handy more detailed article here: https://www.moneysavingexpert.com/family/tax-free-childcare#vs
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