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Childcare Voucher scheme closed to new entrants: your options

Paloma Kubiak
Written By:
Paloma Kubiak

The Childcare Voucher scheme offered via employers has today been closed to new entrants as the Tax-Free Childcare scheme replaces it.

While new parents will no longer be able to claim Childcare Vouchers from employers, existing members can continue to use the funds to help with the cost of looking after children.

Originally, the Childcare Vouchers scheme was set to close in April 2018, but this was extended to October by the education minister.

Tax-Free Childcare

In the place of Childcare Vouchers comes the Tax-Free Childcare scheme which was launched in April 2017.

If you’re currently receiving Childcare Vouchers, you can’t also apply for Tax-free Childcare.

Here’s how Tax-free Childcare works:

  • The government gives eligible families an extra 20% towards the cost of childcare. So, if you pay £8 into your account, the government will give you an extra £2.
  • You can put up to £10,000 into your account a year, which means your top-up could be as much as £2,000 per child per year (or £4,000 for disabled children).
  • The top-up is added instantly, and you can then send electronic payments directly to your childcare provider.
  • The maximum government top-up is £500 per quarter, or £1,000 if the child is disabled.
  • All registered childcare providers – nannies, nurseries, childminders, clubs – can sign up to receive parents’ payments through Tax-Free Childcare.
  • You need to sign back into your account every three months and confirm your details are up-to-date to keep getting the government top-ups.

Are you eligible?

You can apply for Tax-Free Childcare if:

  • You’re a working parent (including self-employed)
  • You have children under 12 (under 17 for disabled children)
  • You, and any partner, both earn at least £125.28 per week
  • You, and your partner, earn less than £100,000. If one or both of you earns more than £100,000, neither of you is eligible.

You can’t get Tax-Free Childcare if you claim Working Tax Credit, Child Tax Credit or Universal Credit. However, it can be used at the same time as the 30 free hours free childcare initiative which parents can apply for up to 16 weeks before your child turns three.