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Parents and employers urged by accountants to prepare for childcare voucher changes

Local accountancy firm Newby Castleman is highlighting changes to Employer Supported Childcare, or the ‘childcare voucher’ scheme, which is to be closed to new entrants to make way for the new system of Tax-Free Childcare.

Tax-free childcare, which is available to parents of children under the age of 12, will replace the workplace childcare voucher scheme.  The childcare voucher scheme was due to close to new entrants in April but this has now been delayed until 4th October 2018.

Following this closure date, parents who wish to continue using childcare vouchers will be able to do so, providing their current employer continues to offer the voucher scheme. Working parents who move jobs to a different employer will not be able to use the scheme.

The government’s tax-free childcare policy was introduced from April 2017 to replace childcare vouchers, will provide more than two million households up to £2000 per year per child to help cover childcare costs.  Unlike the childcare voucher scheme, which only benefited parents whose employer offered the scheme, anyone can apply for tax-free childcare provided they meet the conditions.  Broadly, these require a parent to have a child aged 12 or under in 2017, and work at least 16 hours a week.  The scheme will not apply to those earning £100,000 or more a year or anyone claiming tax credits or universal credit.

Jacquelyn Kimber, Tax Partner at Newby Castleman, said,

“With the costs of childcare increasing, parents should be aware of changes to the financial support they’re being offered.  For some, childcare vouchers will continue to offer the better deal, but for others tax-free childcare will be of greater benefit.  Employers should also note the delay to the closure of the workplace childcare voucher scheme, also known as Employer Supported Childcare.

“To reflect concerns about the timing of the closure of childcare vouchers and the transition to tax-free childcare, the government has decided to keep childcare vouchers open for a further six months until October, allowing more time for tax-free childcare to be set up and to be fully understood by families and employers.”

“While employers can opt to continue to offer childcare vouchers to staff who already receive them, any employers who feel confused by these changes should consider contacting us for professional advice.”

Newby Castleman is one of the Midlands’ leading independent accountancy firms, with offices in Leicester and Loughborough. It offers a range of specialist financial services, business and tax advice for individuals and businesses. For further information, telephone the Leicester office on 0116 254 9262, the Loughborough office on 01509 263500 or visit the website at www.newbycastleman.co.uk.


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