Tax-Free Childcare now delayed until 2017

Early last month, I wrote a blog about the introduction of Tax-Free Childcare from this autumn, which replaces the current childcare vouchers system. That blog article ran through some of the important differences between the new Tax-Free Childcare scheme and the voucher scheme – view blog here.

The key issue that has been highlighted by both the professional and mainstream media is that, once the new Tax-Free Childcare scheme comes into force, it will no longer be possible to join a voucher scheme. So many parents and prospective parents are being advised to consider joining a childcare voucher scheme now before it is too late  – as anybody who is a member of a voucher scheme at the time the new scheme is introduced can continue to benefit for as long as their employer runs the scheme. There are, as always, winners and losers under both schemes but, for the majority of working parents, the current voucher scheme gives a better deal.

News broke on 1st July that the Tax-Free Childcare scheme has been delayed and will now be introduced in early 2017. This follows a decision at the Supreme Court on a legal challenge by a group of childcare voucher providers who appealed against the new scheme on the grounds that the arrangement between HMRC and NS&I (and the company it has chosen to provide the IT infrastructure to implement and run the scheme) contravened EU law.

Whilst the court decision gives the all clear for Tax-Free Childcare to proceed, it has also frozen activity on the project and the Government has now confirmed it will delay the introduction of Tax-Free Childcare until early 2017. So the current childcare voucher arrangements survive for nearly two more years, which will no doubt be to the relief to many parents who can continue to benefit from a scheme that most likely gives them more financial assistance towards their childcare costs than the new scheme will.