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Tax Free Childcare - What if I am in an Employer Supported Childcare scheme?

What if I am in an Employer Supported Childcare scheme?

Tax-free Childcare will eventually replace directly contracted childcare and childcare vouchers.  Workplace nurseries are not affected.  Until April 2018, you can continue to claim childcare vouchers or use directly contracted childcare provided by your employer.  After April 2018, you will no longer be able to make new claims for childcare vouchers or benefit from tax and national insurance savings through directly contracted childcare.

If you are already getting directly contracted childcare or childcare vouchers you can continue to use them after April 2018 if your employer offers them or you can choose to move to the Tax-free Childcare scheme.

You will need to consider which scheme you would be better off in.

This will depend on factors such as:

  • Whether one or both parents is in an ESC scheme

  • The rate of tax you pay

  • How many children you have.

For example; if you are a lone parent with one child and you are receiving the maximum support through an Employer Supported Childcare scheme for a basic rate tax payer, you will be saving a maximum of £933 per year. If you were to join the Tax-free Childcare scheme, you would be saving a maximum of £2,000 per year.

Remember the Tax-free Childcare scheme offers savings per child per year, whereas the Employer Supported Childcare scheme offers savings per parent per year.

Gov.uk has a calculator that can help you decide between the schemes.

We recommend you seek advice from a benefits expert before making a decision. You can use the Turn2us Find an Adviser tool to find a local one.

 

Reviewed: August 2017

Gov.uk childcare calculator

Find out what help you can get towards childcare costs and compare your options.

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