Tax-Free Childcare FAQs

All you need to know about Tax-Free Childcare

To help you to inform your employees, we have compiled a list of the most frequently asked questions about the new Tax-Free Childcare scheme. You can find the answers to these questions below.

Alternatively you can download Big Changes, Big Choices – our guide to Tax-Free Childcare and how it compares to other forms of support with childcare costs. In addition, as a starting point, you can signpost your employees to our Childcare cost savings calculator to help determine if they will be better off on Childcare Vouchers or the Tax-Free Childcare scheme.

Contact us or call 0800 028 3008 to discuss the support we can give to you in communicating these changes to your staff and advising them on help available.

Testimonials

“I would like to pass my thanks onto EFC’s Family Benefits Advice team for visiting our three sites and providing over 40 one to one sessions with our employees. Our employees were very impressed with their expert knowledge on entitlements available to families.

We were grateful for the advice regarding childcare vouchers, tax credits and the new tax-free childcare scheme. Making the best choice with regard to these three substantial benefits can result in savings of thousands of pounds for our families.

In addition to financial advice, your friendly advisers also answered questions on the various childcare arrangements available for employees trying to juggle their work life balance. I would recommend this service to any employer and will welcome EFC’s Family Benefits Advice team back again next year.”

Glen Burgess, Allstate

‘I found your session extremely useful and more importantly, the staff did also! It was really great that you remained impartial and highlighted facts and quirks of the scheme as well as differences etc. it was extremely useful to have a representative come onsite rather than direct staff to read material online. As for the 121 sessions, I have received positive feedback as this is where employees received advice on the most beneficial/ cost saving scheme for them. These sessions were quick, painless and honest which was most appreciated. Overall you were very professional and presented information in a straightforward, understandable manner. You were also flexible on the day with a back to back schedule, so thank you for coming in and your patience on the day!’

Marie-Claire McNally, Kainos

Frequently Asked Questions

  • What is Tax-Free Childcare?

    Tax-Free Childcare allows eligible working families to claim 20% of their childcare costs, up to £2,000 per child per year (or £4,000 for a child with a disability), from the Government.

    The scheme was rolled out gradually starting in April 2017, and is now available to all eligible families.

    To learn more, download ‘Big Changes, Big Choices – our Tax-Free Childcare guide’ (by clicking on the ‘Download our guide’ link at the top of this page), or contact our Family Benefits Advice Service on 0800 028 3008 for advice on your own personal circumstances.

  • What is the difference between Tax-Free Childcare and Childcare Vouchers?

    Chris outlines the key differences between Tax-Free Childcare and Childcare Vouchers.

  • Is the Childcare Voucher scheme closing completely in October 2018?

    No, the Childcare Voucher scheme is due to close to new entrants only in October 2018.

    From October 2018 employers can continue to operate the scheme, and both employers and employees who are in the scheme at that point will continue to make the tax and NIC savings.

  • How does the October 2018 cut off affect employers?

    In October 2018 the Childcare Voucher scheme is currently due to close to new entrants. This means that, after October 2018, an employer will not have any new joiners to their existing scheme.

    The exception to this rule is where an employee has not had more than 52 consecutive weeks without receiving Childcare Vouchers; this will mean that they are not treated as having left their employer’s scheme and could therefore resume receiving vouchers unless the employee gave up the Childcare Vouchers and used Tax-Free Childcare during this time.

  • Do employers have a role in the Tax-Free Childcare scheme?

    Employers do not have a role in the Tax-Free Childcare scheme; employees apply directly to HMRC to access Tax-Free Childcare.

    Under the Childcare Voucher scheme employers also save on Employer’s National Insurance Contributions. There is no direct saving for employers through the Tax-Free Childcare scheme.

  • Who is eligible for the Tax-Free Childcare scheme?

    At a glance:

    • Both parents, or one parent in a single-parent household, must be in employment, earning between £125.28 per week and £100,000 per year.
    • Self-employed parents are eligible to join.
    • Can be used to pay for childcare for children under the age of 12 (under age 17 for
      children with a disability).

    To learn more, download ‘Big Changes, Big Choices – our Tax-Free Childcare guide’ (from the ‘download our guide’ link at the top of this page), or contact our Family Benefits Advice Service on 0800 028 3008 to get advice on your own personal circumstances.

  • What do I need to consider before joining the Tax-Free Childcare scheme?

    Rachel outlines what you will need to consider before joining the Tax-Free Childcare scheme.

  • How does Tax-Free Childcare work in practice?

    Rachel explains how the Tax-Free Childcare scheme will work in practice. Savings are capped at £500 per quarter - £2,000 per annum.

  • How will Tax-Free Childcare affect Tax Credits or Universal Credit?

    Chris explains how signing up to using Tax-Free Childcare may affect Tax Credits or Universal Credit.

  • Can I switch between Childcare Vouchers and Tax-Free Childcare?

    You may be able to switch between Childcare Vouchers and Tax-Free Childcare, however you should seek advice as there are restrictions on those who are eligible to do this.

    If a parent leaves their employer’s Childcare Voucher scheme in order to use Tax-Free Childcare they will be unable to switch back to the same employer’s Childcare Voucher scheme. This is applicable from day one of the Tax-Free Childcare Scheme, not just after the October 2018 closure of Childcare Vouchers to new entrants. This rule is applicable even if the parents find they are worse off using Tax-Free Childcare. A parent could, however, join a different Childcare Vouchers scheme if they were to commence employment, before October 2018, with a new employer that offers Childcare Vouchers. They would have to stop reconfirming their eligibility for Tax-Free Childcare in order to do so.

  • Will I be able to receive Childcare Vouchers after returning from Maternity Leave?

    If you were in the Childcare Voucher scheme but are not currently receiving Childcare Vouchers because you are on maternity leave, can you receive them again when you go back to work?

    This will depend on the length of time you are not receiving Childcare Vouchers and the timing of that period. If you are a member of an employer’s Childcare Voucher scheme you may wish to opt out temporarily, for example, due to maternity leave or taking a career break. Provided you do not have more than 52 consecutive weeks without receiving Childcare Vouchers you will not be considered to have left your employer’s scheme and can resume receiving vouchers on your return to work with the same employer. If you opt out for more than 52 weeks you will be considered to have left the scheme and be unable to re-join after October 2018 as Childcare Vouchers are due to close to new entrants from that date.