Tax-Free Childcare update
23 February 2017
The Childcare Voucher Providers Association (CVPA) and Working Families have published a new report which calls for the government to keep childcare vouchers open, instead of closing the scheme to new entrants in April 2018, thus allowing families to choose the childcare scheme that best suits their needs.
The report ‘The future of childcare support for working parents’ finds:
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Childcare vouchers are a widely-used benefit that is popular with parents and employers alike.
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Many lower earners will lose out on money under Tax-Free Childcare, compared to childcare vouchers.
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Vouchers give a central role to employers, who value the scheme and being able to support the parents who work for them. Parents find vouchers easy to access due to the involvement of their employer, and vouchers provide a way for employers to demonstrate their commitment to supporting family-friendly working practices.
Launching the report, Working Families’ Chief Executive Sarah Jackson OBE said:
“Families juggle working and caring in lots of different ways, and we need a childcare support system that offers maximum choice for working parents.
On paper, the new Tax-Free Childcare scheme offers up to £2,000 of support a year but the truth is many families are not going to be spending the amount needed to benefit from that level of support.
Employees consistently place a premium on employers who understand and support their childcare needs; vouchers are an important mechanism for this discussion to take place. There’s no reason why the creation of the new Tax-Free Childcare scheme has to bring vouchers to an end.”
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Tax-Free Childcare (TFC) trial underway
TFC is currently being trialled with around 1,500 parents as part of the government's new childcare service portal. This service will also allow eligible parents to sign up for the 30 hours extended entitlement for three- and four-year-olds.
The CVPA is calling on HMRC to make the portal as user-friendly as possible who hope concrete results will be made available about the trial and that feedback is incorporated into the service before TFC is publicly launched.
Chief Secretary to the Treasury David Gauke MP has revealed that the government is planning to publish an updated impact assessment of TFC. The information came in response to a parliamentary question tabled by Yvonne Fovargue.
The existing impact assessment for TFC dates from 2014, before changes were made to the eligibility requirements. It shows that, on average, families will benefit by only £600 a year under TFC.