Could you lose out when childcare vouchers close to new entrants on 4th October?
Find out why the scheme is so important and how you can take action to help save it
The Childcare Voucher scheme is due to close to new entrants on 4 October 2018 following a six month extension announced by the government in March. This means parents must have put in place the relevant salary sacrifice arrangements with their employer on or before 4 October i.e. the first payday you receive a reduced salary.
Expectant parents, working families not registered before then, and current users who switch jobs after October, stand to lose out on vital childcare support.
Why is the Childcare Voucher scheme so important?
The Childcare Voucher scheme is a government-approved, tax-efficient way of paying for childcare. Once you join the scheme you can swap up to £243 a month (£55 a week) of your gross salary for childcare vouchers.
All registered childcare providers (including childminders, nurseries, nannies and holiday and out of school clubs) can accept the vouchers as a method of payment.
It’s free to sign up to the scheme, and it applies whatever rate of tax you pay. Both parents can sign up for it, doubling the amount you can swap (and save).
For employed parents who have children in childcare, this scheme makes financial sense, and helps allay some of the crippling costs. It’s something we ourselves gratefully used when we were employed.
But for future parents, this financial relief (worth up to £1,866 a year if two parents on a basic tax rate use the maximum allowance) will no longer be available.
Tax-Free Childcare vs Childcare Vouchers
The new system of Tax-Free Childcare (TFC) provides more financial support to parents that spend more on childcare. These families must be able to spend £8,000 of their own money on childcare each year to get the headline £2,000 of support and often live in more affluent areas. For example, Department for Education data shows the average family in London will receive three times as much support (£905) under TFC as those in the North East (£312).
Childcare Vouchers, however, are a salary sacrifice scheme based on earnings rather than expenditure, meaning those that earn the least can claim the most support. They support families with one parent working, and unlike TFC, can also be used alongside other benefits, including Tax Credits and Universal Credit.
Since the launch of TFC in April 2017, the scheme has experienced significant delays and technical glitches which has prevented parents from accessing vital childcare support. As a result, take-up has been considerably lower than expected with many parents preferring to stay on Childcare Vouchers.
Are you affected by the closure of this scheme?
- You will be impacted by the closure of the scheme if any of the following statements apply to you:
- You currently access Childcare Vouchers but change job after 4 October.
- You are a parent-to-be who will need to use childcare and whose baby will be born after 4 October.
- You’re an employer who wants to offer Childcare Vouchers to new staff.
Even if you are currently using the scheme you are not ‘safe’. As soon as you change job, your right to access the vouchers will end after 4 October if this change goes ahead.
According to The Mirror, 780,000 parents currently claim Childcare Vouchers. And there are 280,000 first born babies born every year – the parents of whom will not be able to access the scheme.
Can you campaign to keep the Childcare Voucher scheme open?
This is such an important change for families across the UK that there’s a campaign underway to save it. Already the scheme has been extended for six months (it was due to close earlier in the year) following a campaign by parents. So we know that our voices can have an impact.
If you’d like to join the current campaign to save the Childcare Voucher scheme, contact your local MP and ask them to put pressure on the government to keep Childcare Vouchers open to new users after October. Here’s an easy way to do this:
- To find your local MP just click here and enter your postcode.
- Click on your MP’s name.
- On their page click on the ‘Send a message’ button.
- Enter the subject line ‘Keep Childcare Vouchers open for parents’.
- Then write a personal message about why you believe the scheme should be kept open. You might want to explain how the scheme has benefited your family personally, or how you’ll be impacted by the change.
Share the campaign on social media
If you know anyone else who will be affected by the change or feel passionately about the closure, please forward this article to them and encourage them to get involved too. The more people who speak up about this, the more chance we have of being listened to.
You can also use social media to ask your MP to keep Childcare Vouchers open to new entrants.
Here is a sample tweet you can use and personalise:
Please [insert MP’s twitter handle] stand with working parents and urge @hmtreasuryto halt the closure of Childcare Vouchers to new entrants and keep this vital support open alongside Tax-Free Childcare #SaveChildcareVouchers
Here is a sample Facebook post:
I value flexibility and choice when it comes to paying for childcare. If you do too, stand alongside working parents like me and join the #SaveChildcareVouchers Lobby your MP to keep Childcare Vouchers open beyond October 2018! Find out more here: https://futureofchildcaresupport.com
You can learn more about the campaign to save the Childcare Voucher scheme here: https://futureofchildcaresupport.com
