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Tax-Free Childcare Update

Posted on 11 April 2016

Following the Government’s Budget 2016 announcement on the 16th March, there are some further developments regarding Childcare Voucher schemes and Tax-Free Childcare.

Tax-Free Childcare (TFC) is scheduled to roll out from ‘early 2017’. This will be gradually rolled out starting with families with younger children and extended to all eligible families with children under 12 by the end of 2017.

The good news is that to facilitate the phased introduction, the existing Childcare Vouchers scheme will now remain open to new entrants until April 2018 to support the transition between the schemes. This is beneficial to parents that would be financially better off staying with Childcare Vouchers (previously this was scheduled to be withdrawn to new entrants from early 2017).

Remember if you are already getting Childcare Vouchers when TFC is introduced, you are able to stay on the scheme until you stop receiving vouchers for longer than 12 months, change employer, start getting TFC or no longer have an eligible child (i.e. from 1st September following their youngest child’s 15th birthday or 16 if disabled).  Some families will not be eligible for the new TFC scheme, some will benefit and some will lose out.   The best advice for any parents with childcare costs is to start getting CCVs now – even for a minimal value, to protect their entitlement. This way you will have a choice of which scheme is more beneficial. 

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