The Government has announced that the closure of its workplace childcare voucher scheme has been delayed until 4 October 2018.
This means that from the end date childcare vouchers and directly contracted childcare that is part of employer-supported childcare arrangements, will close to new entrants.
However, after the closure date, parents who are already using childcare vouchers can continue to do so for as long as they remain with their current employer, and if their employer continues to offer the scheme.
The change makes way for the tax-free childcare scheme, which was introduced from April 2017. The tax-free childcare policy will provide parents with children under the age of 12 up to £2,000 a year per child to help cover childcare costs.
Why Has the Change Been Made?
The decision to phase out childcare vouchers and directly contracted childcare, and replace this support with tax-free childcare was made in 2013, and received parliamentary approval through the Childcare Payments Act 2014.
To reflect concerns about the timing of the closure of childcare vouchers and the transition to tax-free childcare, the Government has decided to keep childcare vouchers open for a further six months until October. This will allow more time for tax-free childcare to bed in, for awareness to increase and for families to understand the support they can receive under the scheme.
What About the Free Childcare Initiative?
The new scheme will run alongside the Government’s free childcare initiative, which has increased the amount of free childcare available to working parents who have children aged between 3 and 4 to 30 hours a week, and support that is available through universal credit. This can cover up to 85% of childcare costs.
Since the Childcare Choices service opened, where parents can apply for tax-free childcare and the 30-hours free childcare, over 370,000 parents have applied. More than 335,000 of these users are eligible to receive 30-hours of free childcare and more than 210,000 have a tax-free childcare account.
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