In 2017, the government will be rolling out a new system for working parents to access savings on their childcare costs - Tax-Free Childcare (TFC)
TFC will see the government subsidising 20% of a child’s childcare costs on fees of up to £10,000 per year, saving up to £2,000 per child, per year.
Childcare Vouchers will be open to new entrants until April 2018. After this point, the scheme will no longer be available for new joiners. It will, however, remain available for those already using it for as long as it is required.
Our research has shown that 80% of working parents will be financially better off if they continue to use Childcare Vouchers. This makes it important for parents to get signed up to the scheme before the cut-off date, so that they are able to make the choice of which scheme to remain on.
The government provides a calculator where you can see which scheme works best for you and the assistance you are entitled to. Click here to fill out the calculator.
Check your eligibility for the Tax-Free Childcare (TFC). If you are currently better off using Childcare Vouchers (CCV) and your circumstances change in the future, you can opt out and join the TFC. To do this, you must make a declaration to your employer. Once on TFC, parents cannot go back to using CCV. Therefore, you need to carefully consider your childcare requirements going forward to ensure you are utilising the best scheme for your family.
If CCV are best for your family, continue to use them for as long as you need them. To stay in the scheme, you must make at least one deduction each tax year. Remember, these can be used for children up to the age of 15 (16 if the child is disabled). If TFC provides the best savings for your family, you can use CCV now until the new scheme is rolled out to you, saving up to £77 per month. Remember, both parents can use CCV, potentially doubling the savings.
If you are better off using TFC and you have CCV saved up in your online account, you do not have to use them up before joining the new scheme. Vouchers can be used for as long as you need them, together with your TFC funds until they are used up.
Are your friends paying for registered childcare? Help your friends and colleagues to access savings now by telling them about CCV and prompting them to join their employer’s scheme. If their employer doesn’t offer Childcare Vouchers, they can contact Busy Bees Benefits with their employer’s details and we will get in touch to discuss setting up a scheme.
Join a Childcare Voucher scheme now if you have a requirement. During the course of 2017, we will be helping working parents to find out which scheme suits them best.