A new tax-free childcare
voucher scheme replacing the current employer supported scheme has been
announced. The new scheme is due to be introduced in Autumn 2015 and will
no longer depend on participation by employers or involve any form of salary
Employees who are already
in an employer-supported scheme can decide whether they want to remain in the
employer scheme or join the new Government run scheme. However, once the
new scheme is introduced, employers will no longer be able to offer new employees
childcare vouchers under the old scheme.
If an employee wants to
leave the old scheme, they must notify their employer 3 months before they join
the Government’s new scheme.
The main elements of the
new Government scheme are:
For every 80p paid into the
scheme, the Government will top up an extra 20p;
To qualify, parents will
have to both be in work, earning just over an average of £50 per week and not
more than £150,000 per year each. For single parents, the same salary limits
Any eligible working family
can make use of the scheme and is no longer dependent on employers also
Parents and others can pay
into the childcare account as and when they like, so employees can decide to
pay in one month and then have a break from the payments if they need to.
It also means that grandparents and other family members can also pay into the
account if they want to;
Vouchers will be held in an
online account run by National Savings and Investments and can only be used for
The scheme is available for
up to £10,000 of childcare costs per child each year but there is no limit on
how many children you can claim for; and
Money can be withdrawn from
the account at any time. If the employee contributions are withdrawn,
then the Government will also withdraw its corresponding contribution.
We anticipate employees
will transfer over to the new scheme and therefore employers should be prepared
to deal with any queries about it or will manage the transfers.
Pam Loch, Managing
Director and Senior Associate Julie Edmonds of niche employment law practice,
Loch Employment Law.