The Income Tax (Limited Exemptions for Qualifying Childcare Vouchers and other Childcare) (Relevant Day) Regulations 2018

09 April 2018

Following on from our previous updates The Income Tax (Limited Exemptions for Qualifying Childcare Vouchers and other Childcare) (Relevant Day) Regulations 2018 confirm the previous reports that 4 October 2018 will be the latest  date when childcare vouchers and directly contracted childcare, provided as part of Employer Supported Childcare, will close to new entrants.

After that date, parents who are already using vouchers can continue to do so for as long as they remain with their employer, and their employer continues to offer the scheme.

As previously confirmed by HMRC the voucher scheme will need to have been activated by that date.

HMRC have provided the following update to accompany the update as it relates to the laying of the regulations:

“Since opening the childcare service through which parents apply for 30 hours free childcare and Tax-Free Childcare more than 370,000 customers have successfully applied and are now using the service. Of these, more than 335,000 parents are eligible for 30 hours free childcare. Over 210,000 have a Tax-Free Childcare account.

Parents can apply via the childcare service for both 30 hours free childcare and Tax-Free Childcare. The application is straightforward and can be accessed via the childcare choices website.

We believe Tax-Free Childcare is a fairer and better targeted system than childcare vouchers. Through Tax-Free Childcare all families who are eligible can get support regardless of who their employer is, or whether they are self-employed, and support is based on the number of children in a family, rather than the number of parents. Tax-Free Childcare is targeted at a similar income population as childcare vouchers but will provide support to nearly 1 million more families compared to the number currently using vouchers.

… As we communicated recently, to reflect concerns about the timing of the closure of childcare vouchers and the transition to Tax-Free Childcare, the government has decided to keep childcare vouchers open for a further six months. This will allow more time for Tax-Free Childcare to bed in, for awareness to increase and for families to understand the support they can receive under the scheme. Now that Tax-Free Childcare is fully rolled out, the government will keep it under review to ensure it is delivering the support needed for working families.”

The Low Income Tax Reform Group (LITRG) also provide guidance for working parents on getting help towards the costs of childcare and have recently highlighted their concerns about current guidance available to working parents, “we do not believe the government is providing enough guidance or support to help people navigate the system in order to choose between the schemes and understand how they interact”.

Geographical extent: Tax-free Childcare is UK wide. Childcare offers will vary across devolved nations - 30 hours free childcare is in England only.