What are Childcare Vouchers?

Childcare vouchers have been around for some time. They aim to help parents save some money on childcare costs with the support of their employer. The government say the scheme will save you £953 a year if you are a basic-rate taxpayer. You could save almost £2,000 if you and your partner both use it.

It works like a ‘salary sacrifice’ scheme where parents set aside some of their wages to get vouchers. You can then use these vouchers to pay for childcare. The great thing about this system is that you don’t have to pay tax or National Insurance on the money you set aside.

You can pay as much as you like each month into the scheme but there is a limit of £55 a week, or £243 a month. You will have to pay for childcare as normal (with tax and National Insurance) once you pass this limit.

This £55 per week limit is per parent, and not per child. No matter how many children you have, you cannot set aside more than this. If your partner decides to claim too, they can also set aside £55 per week. That means that for your household, you can put away £110 a week or £486 a month, depending on which is better for you.

You don’t buy the vouchers from the government itself. Several independent providers, like Edenred, offer the scheme. You and your employer then sign up to it, and buy the vouchers from the independent provider.

You can use your vouchers with any registered childcare provider.

How does the Childcare Voucher scheme work?

Your employer must offer the scheme for you to sign up. You will need to find out what company they are using to provide the childcare vouchers.

Once you know which company, you can go onto their website and create an account online. This account will be where you manage your payments and it will hold all your vouchers.

If you sign up to the scheme, your employer will deduct £55 a week or £243 a month from your salary. This will go straight to the company providing the voucher. You can then view this payment online and see what vouchers you have.

Online, you will get a code for each voucher which you can then give the childcare provider. They will then be able to redeem this voucher for money.

Each voucher has an expiry date, so be careful, or else you will lose the money you set aside.

Can I withdraw the money?

It depends on what company you and your employer used for the scheme. Early Years Vouchers say that they will not give you a refund. If you leave your job and still have £200 in your account, you won’t be able to get that back.

Other companies are like Early Years Vouchers. Edenred and Kiddivouchers say that only your employer can refund you.

It depends on what company you have used, so check their website or give them a call.

If you’re stuck and can’t get a refund from the company, you can ask your employer. They may give you a refund of the money or they may not. If they do, you will get the amount back through your payslip. Tax and National Insurance will now apply to that money.

Your employer may not agree to this, especially if you’ve already left that job.

Childcare Voucher October 2018 Changes

The government have planned to shut the scheme down now for a while. But in March, over 100,000 people signed a petition to keep it open. The government have now agreed to extend it for 6 months.

Currently, the Childcare Voucher scheme will keep running until October 2018. After that, it won’t accept any new applications.

If you were part of the scheme before October, this doesn’t mean that you will lose any vouchers you haven’t used. You’ll be able to use all the money and vouchers you have set aside even after October.

There are some exceptions to this rule. You won’t be able to use them after October 2018 if you leave your current employer or they stop offering the scheme. You will also lose your vouchers if you take a career break for more than a year.

Tax-Free Childcare is replacing the current Childcare Voucher scheme. If you want, you can apply to move over to the new scheme. If your application for Tax-Free Childcare is successful, your Childcare Vouchers will stop. If this is the case, you need to tell your employer within 90 days.

You can still use your leftover Childcare Vouchers to pay for childcare. But after this, you won’t be eligible to receive new vouchers.

Childcare Voucher Information For Employers

If you are an employer, the scheme is good for you too for lots of reasons.

First, any employee who uses the scheme will not pay National Insurance on that money. This means the amount you also contribute to National Insurance will go down. If your employee is a basic rate taxpayer, you could save around £402 a year per parent.

Also, each parent that signs up could save almost £1,000. If a couple signs up, they could save almost £2,000 each year. This means that your employees will be happier and have more money each month. Happier employees are often sick less and more motivated at work.

What to do if you have a change in circumstances

If you’re eligible for Childcare Vouchers and pay some of your salary into it, you’ll not lose this money. If your circumstances change and you’re not eligible any longer, you will still be able to use the money you paid in. For example, if you lose your job, you will not get new vouchers.

Every three months, you will have to sign up to the scheme from the beginning. The government says this saves money because it stops going to people who aren’t eligible.

You will have separate accounts for each child, but the date where you have to re-sign up will be the same for each child.

If you and your partner split up, only one of you will be able to have an account. Even if your child spends half his time with each parent, only one of you will get childcare vouchers. If you can’t decide who should do this, then you should called HMRC. An adviser there will look at your situation and decide for you.

Who can claim Childcare Vouchers?

You can sign up to the Childcare Voucher scheme if the following apply:

  • Your children are under 12 years old (or under 16 if they have a disability.
  • You earn less than £100,000 (if your partner also works, they must earn under £100,000). If you both earn £99,999 each then you are still eligible for the scheme.
  • You do not claim Universal Credit or Child Tax Credits. If you do claim these benefits, the government will contribute up to 85% to childcare costs. Both you and your partner need have a job to receive this support.
  • Your employer offers the scheme.

Where can I use Childcare Vouchers?

You will not be able to redeem your vouchers if the carer hasn’t signed up to the scheme. You also will not be able to redeem your vouchers if the carer isn’t an ‘approved childcarer’. You can find more details about ‘approved childcare’ below.

For example, both you and your employer sign up to use Faircare’s Childcare Voucher scheme. You then want to use the vouchers at your local nursery. The nursery itself must register with Faircare to redeem the payment.

Each company that provides Childcare Vouchers has different rules about spending them. Usually, as long as it is a registered childcare provider it is fine.

Here are some examples:

  • A registered childminder, playgroup, nursery.
  • A registered school if the child is over 5. The childcare must be on the school premises and take place outside of school hours.
  • After-school lessons at a registered school. This can be anything from football clubs to music lessons. It has to happen outside of school hours and on the school grounds.
  • Childminder that has registered with Ofsted in England. If you live in Wales or Scotland, then they need to register with either the Scottish Care Inspectorate or the Welsh Care Inspectorate. In Northern Ireland, childminders must register with the Local Early Years team.
  • Registered home careworker.
  • Relatives in Scotland and England (if they are a registered childminder). If you choose a relative, they have to look after your kids outside of your home. In Northern Ireland, they must look after your kids outside the home. They must also look after another child at the same time. In Wales, you cannot use childcare vouchers with relatives at all.
  • Any foster carer in Wales, Scotland and Northern Ireland. In England, the foster carer must be a registered childcare provider.

If you want to check if they are a registered childcarer, you can use these links:

England – Ofsted

https://www.gov.uk/find-ofsted-inspection-report

Wales – Care and Social Services Inspectorate Wales

https://careinspectorate.wales/?lang=en#/find-a-care-service/service-directory/

Scotland – Scottish Care Inspectorate

http://www.careinspectorate.com/

Northern Ireland – The Local Early Years Team register

https://www.nidirect.gov.uk/articles/early-years-teams

Information for childcare providers

If you are looking after a child who is part of the Childcare Voucher scheme, you need to register.

If you live in England, you should register with Ofsted. In Scotland and Wales you should register with the local Care Inspectorate. In Northern Ireland, you should register with the Local Early Years Team register.

You can either receive paper vouchers or electronic vouchers as payment. This depends on what Childcare Voucher provider the parents and employer are using.

All you need to give the parents is your registration number. You receive this number once you registered with the Childcare Voucher provider.

If you get paper vouchers, you can redeem them by posting them to the Childcare Voucher provider. You can also use the code printed on the paper to redeem it online.

You will get paid straight away if the parents are using electronic vouchers.

When you first register for the scheme, you will have to put in your payment preferences. Some providers will offer lots of options like Paypal, cheques and bank transfers. You will need to put in details of where you want to receive your payments when you sign up.

Payment dates depend on the provider and what method of payment you’ve chosen. Check with the specific provider to find out how long they’ll take to pay you.

If I’m not eligible for Childcare Vouchers, what other options are there?

The government has a calculator so you can check what other childcare options there are.

https://www.gov.uk/childcare-calculator

What childcare support am I eligible for when my child is 2 years old?

If you have a child that is 2 years old, you may be eligible to get 15 free hours of childcare a week. The money will come straight from your local council to the childcare provider. You will need to complete a form with the childcare provider to start claiming. You need to make sure to have your National Insurance number ready.

You must be receiving one of the benefits below to be eligible for the scheme:

  • Universal Credit
  • Working Tax Credit
  • Employment and Support Allowance (ESA)
  • Jobseeker’s Allowance (JSA)
  • Income Support
  • Pension Credit

If you do not fit the above the criteria, you could still be eligible if:

  • Your local council will provide the childcare
  • Your child gets Disability Living Allowance (DLA)
  • They have “Special Education Needs”.
  • They used to be in care.

You will get either:

15 hours of free childcare a week for 38 weeks or 570 per year.

This depends on whichever scheme suits your schedule and needs better.

The free childcare will begin from either January 1st or April 1st after your child’s 2nd birthday. You can use it with any registered childcare provider.

If you live in Wales, Scotland or Northern Ireland you should contact your local council. The schemes offered will be different than in England.

If you are successful, the government will give you an online account to manage your free hours.

What childcare support am I eligible for when my child is 3 or 4 years old

If you have a child that is 3 or 4 years old, you may be eligible to get 30 free hours of childcare a week. The money will come straight from your local council to the childcare provider. You will need to complete a form with the childcare provider to start claiming. You will have to make sure your National Insurance number is ready.

To be eligible:

  • Both you (and your partner if you live together) must be working.
  • If you (or your partner) don’t work but receive incapacity benefit. This also includes Disability Living Allowance (DLA), carer’s allowance or ESA.
  • You must work at least 16 hours a week and earn minimum wage.
  • You (or your partner) cannot earn more than £100,000 a year each. If you both earn £99,999 then you are still eligible.
  • You haven’t been off work for more than 12 months.
  • Your child usually lives with you.
  • The child is not your foster child.
  • Your residence permit says you can access public funds.

The free childcare will begin from either January 1st or April 1st after your child’s 3rd birthday. You can use it with any registered childcare provider.

If you or your partner are self-employed and in the first year of the business, your earnings don’t count. Even if you earn over £100,000, you will still be eligible for the 30 free hours.

If you are successful, the government will give you an online account to manage your free hours.

If you live in Wales, Scotland or Northern Ireland you should contact your local council. The schemes available are different than England.

Tax Free Childcare

Tax Free Childcare is the new scheme replacing Childcare Vouchers. After October 2018, you cannot make a new application for Childcare Vouchers. Instead, you will apply for Tax Free Childcare.

Tax Free Childcare is different because it doesn’t involve your employer. If you have a bad employer or an employer who doesn’t offer the voucher scheme, then it won’t affect you.

Tax Free Childcare is also different because your allowance is higher. If you spend a lot of money on childcare, this scheme is better for you. If you don’t spend much on it, then the Childcare Voucher scheme is the best for you.

You get an allowance of £500 every 3 months (or £2,000 in a year) for each of your children. You can then use this allowance to pay for childcare. If your child has a disability, this allowance doubles to £4,000 a year.

To be eligible for Tax Free Childcare:

  • Both you (and your partner if you live together) must be working.
  • If you (or your partner) don’t work but receive incapacity benefit. This also includes Disability Living Allowance (DLA), carer’s allowance or ESA.
  • You must work at least 16 hours a week and earn the minimum wage.
  • You (or your partner) cannot earn more than £100,000 a year each. If you both earn £99,999 then you are still eligible.
  • You haven’t been off work for more than 12 months.
  • Your child usually lives with you.
  • The child is not your foster child.
  • Your residence permit says you can access public funds.

Tax credits for childcare

If you are already claiming tax credits, or if you’re eligible, you may be able to get an extra amount for childcare. This is usually capped at around £2,000 per year. Universal Credit is replacing Tax Credits, so this benefit will stop soon and you will switch.

You may be able to claim either:

  • Child tax credit
  • Working tax credit

To be eligible:

  • Your child should be under 16 (or 17 if they have a disability).
  • You don’t claim Universal Credit, tax credit or Tax Free Childcare.
  • Must use a registered care provider.

The amount you’ll get depends on where you live and when your children were born. You should contact the tax credit helpline for more information about what you can get.

Universal Credit for childcare

Universal Credit will help you with 85% of your childcare costs. The cap is £646.35 for one child or £1,108.40 for two or more.

To be eligible to receive Universal Credit and help with childcare, you must:

  • Be aged between 18 and the state pension age (exceptions apply).
  • Be unemployed or on a low income.
  • Have savings lower than £16,000.
  • Not be in full-time education. This could be school, university or a training college (exceptions apply).

Live in an area where Universal Credit has started replacing the older benefits. Citizens Advice has a useful postcode checker, which will tell you if it is available in your area:

https://www.citizensadvice.org.uk/benefits/universal-credit/before-you-apply/Check-if-youre-eligible-for-Universal-Credit/

Childcare Vouchers if you or your partner are still in full-time education

If you or your partner are still studying full time, you might be able to get help with childcare costs.

Care to Learn will give you weekly payments if you’re still in school or college (taking things like a BTEC or NVQ). You must be under 20 to be eligible.

You can get a Discretionary Learner Support grant if you’re over 20 and still in further education. This could be things like a BTEC or NVQ.

Useful contacts

Employers for Childcare

A charity which helps families get the right support in the workplace. It provides free advice about childcare vouchers and other options.

0800 028 3008[email protected]

Ofsted

Ofsted is an independent body set up to regulate education and children’s services. You can contact them to check if your childcare provider in England is registered.

0300 123 1231[email protected]

Social Care Protectorate Wales

The Social Care Protectorate is an independent body. It was set up to regulate childcare and care services in Wales. You can contact them to see if your childcarer is registered.

0300 30 33 444 – You can email them using the following link: https://socialcare.wales/contact?record-language-choice=en-cy

Scottish Care Protectorate

An independent body which monitors care services provided to children in Scotland. It also monitors social work provided to adults. You can contact them to check if your childcare provider is registered.

0345 600 9527[email protected]

Early Years Teams

The Early Years Teams are groups of social workers throughout Northern Ireland. They monitor and support childminders and childcare providers. You can contact them to check if your childcare provider is registered and certified.

Contact details depend on which Northern Irish Trust you live in. You can check using this website:

https://www.nidirect.gov.uk/contacts/health-and-social-care-trusts-early-years-teams

Sources

http://www.childcarevouchers.co.uk/

https://www.employersforchildcare.org/news-item/government-announce-six-month-extension-of-the-childcare-voucher-scheme/

https://www.gov.uk/help-with-childcare-costs/childcare-vouchers

https://www.edenred.co.uk/reward-recipients/childcare-vouchers-login/childcare-vouchers-savings/

https://www.nidirect.gov.uk/

https://careinspectorate.wales/

http://www.careinspectorate.com/