A popular benefit provided by employers to employees to help manage their childcare costs is to close to new entrants imminently. The Childcare Voucher Scheme, which has been open for the past 30 years, is being replaced by a new government initiative called Tax Free Childcare.

The Childcare Voucher Scheme is a Government-approved, tax-efficient way of paying for childcare. Members of the scheme can exchange up to £243 a month (£55 a week) of their gross salary for childcare vouchers.

The replacement scheme, Tax Free Childcare is designed so that for every 80p put in by a member of the scheme, the Government will add 20p. Members can get up to £500 every 3 months (£2,000 a year) for each child to help with the costs of childcare. It is also open to self-employed individuals which the Childcare Voucher Scheme was not. 

The changes have been delayed by 6 months due to opposition from some parents who expect to benefit less under Tax Free Childcare but it does appear that the Childcare Voucher Scheme will be closed to new members in October 2018. We will keep you up to date with any further changes if they occur.


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Author: Rafia Ahmad

Senior Solicitor, ESP Law Ltd

Rafia trained and qualified with Wedlake Bell LLP, a London City law firm where she was an employment solicitor for six years before moving to the fast paced trading floor of Cantor Fitzgerald LLP, a London based New York prime brokerage/investment bank as in-house employment counsel. Prior to joining ESP, Rafia was a senior employment solicitor for five years with Backhouse Jones, the UK’s number one national road transport law firm. She advises on all employment matters both contentious and non-contentious including tribunal proceedings.