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Law for Business

Knowhow - guidance - precedents

Loch Employment Law , 26 MAY 2015

New Childcare Voucher Scheme

Pam Loch

Managing Partner


New Childcare Voucher Scheme
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 sacrifice.

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 apply;
  • Any eligible working family can make use of the scheme and is no longer dependent on employers also joining;
  • 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 Ofsted-regulated childcare;
  • 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  • Money can be withdrawn from the account at any time. If the employee contributions are withdrawn, then the Government will also withdraw its corresponding contribution.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.

For more information on Loch Employment Law please go to www.lochlaw.co.uk and for our sister company HR Advise Me go to www.hradvise.me

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