Important Information About The New Tax-free Childcare Scheme

The government has announced that from 2015 the current childcare voucher scheme will be replaced with the Tax-free Childcare scheme which will benefit more parents.

As a childcare provider, you will need to know about the new funding scheme as parents will naturally have questions about the available savings and how their childcare bill will be paid. As it will be down to parents to choose a provider for their Tax-free Childcare scheme account, they may seek advice directly from childcare providers.

The key points of the scheme are outlined below:

  • The Tax-free Childcare scheme will save parents up to £1,200 per child per year.

  • It is planned that the Tax-free Childcare scheme will be phased in from Autumn 2015.

  • The Tax-free Childcare scheme will benefit more parents than are currently receiving childcare vouchers – around 2.5 million families compared to 0.5 million.

  • For the first year, the Tax-free Childcare scheme will only be available to those whose children are under 5.

  • Over time the scheme will grow to include children under 12

  • Unlike the childcare voucher scheme, both parents must be in work in order to receive the funding.

  • The parent will pay 80% of their childcare bill, which will be match funded with 20% from government. So, for a childcare bill of £100, the parent will pay £80 and the government will pay the remaining £20. This will be administered via a voucher provider.

  • Parents will have to fund anything above £7,200 per annum (£6,000 from the parent, £1,200 from the government)

  • As with childcare vouchers, parents will be able to use the Tax-free Childcare scheme only to pay for registered childcare.

  • The new Tax-free Childcare scheme will eventually replace the current childcare voucher scheme.

  • The childcare voucher scheme will continue to be available to parents who wish to join until the new funding is available.

  • Some parents will be better off under the childcare voucher scheme and will be allowed to choose whether to continue receiving childcare vouchers for up to five years after the Tax-free Childcare scheme is in place.

  • The finer details of the Tax-free Childcare scheme will be set out following a consultation. Busy Bees Group will of course be contributing to this process to ensure parents get the best deal possible.