An update on the roll out of Tax-Free Childcare

Important Information

Update 20 June 2017: We have been contacted by a number of parents who have had difficulty opening and accessing a Tax-Free Childcare Account due to problems with the HMRC online system.

If you are already using Childcare Vouchers, remember that you have 90 days to inform your employer in writing that you are opting out of the scheme to use Tax-Free Childcare.

Our advice is that if you are opening a Tax-Free Childcare account you do not opt out of Childcare Vouchers until you have opened your account and are confident that it is working, provided you inform your employer within 90 days.

Seek Advice Before Switching

Employers For Childcare is urging parents to think carefully, and seek advice, about whether they will be better off switching to Tax-Free Childcare for help with their childcare costs, before they make a change that is irreversible.

A recent article in the Nursery World magazine has highlighted some issues experienced by parents and childcare providers with the roll out of Tax-Free Childcare, reporting problems with the online system, called the Childcare Service, used to register and to access accounts.

Some parents and childcare providers have been able to register to use Tax-Free Childcare without difficulty and, where it is in a parent’s best interests to use Tax-Free Childcare we will always advise them of this. However, we are concerned that some parents will make a switch to Tax-Free Childcare, and experience difficulties, without having all of the information they need and could end up out of pocket as a result. We would urge all parents who are considering making a switch to Tax-Free Childcare to contact us before they do so.

Issues experienced by parents

Some parents have reported being unable to open or use their Tax-Free Childcare account, or have experienced delays in having an account approved. Others have been able to open an account and pay in but have then been unable to access their money when needed, resulting in them having to find money to cover their childcare fees elsewhere or incur a ‘late’ fee.

Issues experienced by childcare providers

Some nurseries have experienced problems including having to wait up to five days for the money parents have transferred via the Childcare Service to appear in their account. Others have had issues setting up an account to receive payments as they have not received a Unique Tax Reference number or have not been provided with the correct log-in details.

What if I experience a problem?

If a parent or provider does experience a problem they should call HMRC’s dedicated Childcare Service helpline on 0300 123 4097.

Considering a switch? Use our Checklist

At Employers For Childcare we want to ensure that all parents have the information they need to make the best choice regarding financial support for their family, whether this is Tax-Free Childcare, Childcare Vouchers or Tax Credits.

We are aware of some parents who have made a switch to Tax-Free Childcare without considering whether it is the best option for them. If you are a Childcare Voucher user who is considering making a switch to Tax-Free Childcare, we would urge you to ask yourself the following questions before you do so:

1.      Have you received a free ‘better off’ calculation from Employers For Childcare’s Family Benefits Advice Team setting out what form of financial support is best for you?  
2.      Have you read our Big Changes, Big Choices guide to understand the differences between the various forms of support and eligibility requirements?  
3.      Have you considered your needs both now and in the future, factoring in any changes in circumstances, for example, a decrease in the amount of childcare you will be using?  
4.      Have you confirmed that your childcare provider is registered to accept Tax-Free Childcare payments?  
5.      Are you aware that, if you leave Childcare Vouchers in order to join Tax-Free Childcare, you will be unable to switch back, even if you are worse off or your circumstances change? (unless you change employer before the scheme closes to new entrants)  


Big Changes Big Choices

As further information is made available we will continue to update the Big Changes, Big Choices guide so make sure you check our website regularly to ensure you are referring to the most up-to-date version.

We know that working out what is best for your family can be complicated – we can help!

Employers For Childcare’s Family Benefits Advice Service was specifically set up to ensure families claim the best support available to them, particularly with childcare costs.

Get in touch or call free on 0800 028 3008 to speak to one of our Advisors and receive a personalised calculation setting out which form of financial support is best for you.