Changes to tax savings on childcare

8 July 2015

Paper stick people holding hands behind pile of coins

Changes to tax savings on childcare – be in a position of choice!

Are you paying for childcare and not receiving any tax savings through salary exchange schemes?

If you are in the Childcare Voucher Salary Exchange Scheme, the following information will be important to you.

Tax-Free Childcare (TFC) scheme

The Government plans to introduce a new Tax-Free Childcare (TFC) scheme in early 2017, giving eligible parents a tax refund of up to 20% of childcare costs (to a maximum of £2,000 per child per year).

To be eligible for the new scheme, both parents must be employed as well as basic or higher rate tax payers. (A full announcement on the criteria is yet to be made by the Government.)

The scheme is a government initiative and not employer supported. After registering for the scheme you will need to submit quarterly returns to NS&I (National Savings & Investment) who will be administering the scheme on behalf of the Government. You will then be reimbursed for the 20% tax free element of your childcare costs.

You will not be able to be a member of both the TFC and Childcare Vouchers scheme – you will need to make a decision about which scheme gives you and your family the most savings. To obtain a realistic view of the possible savings, you will need to consider how much you will be paying for childcare in a few years’ time, as well as at the present time.

Putting you in a position to make the best decision

You will need to be a member of the Childcare Voucher Scheme in order to give you options when the TFC scheme is introduced.

The Childcare Voucher Scheme will not be open to any new members when the TFC scheme is implemented, therefore, please join up as soon as possible. For more information including the benefits of enrolling in the scheme and to sign up please go to KiddiVouchers.

If you are already in the voucher scheme and are not sure whether the TFC will be better, stay where you are for the time being until more information is available and you can make a decision.

For more information please email the Childcare Office.