Childcare voucher scheme cut-off extended by six months
The government has performed a surprising backtrack on plans to abolish childcare voucher schemes to new entrants, following the recent introduction of its new Tax-Free Childcare (TFC) option.
Originally, HMRC said new entrants to employer-provided childcare vouchers schemes would not be permitted from April. Parents already in existing schemes would be able to remain in them for as long as they required, provided their employer continued to operate the scheme.
TFC, which has been introduced in phases over the past year, with the final launch in mid-February, was due to replace the existing voucher schemes.
But, following political pressure, the government has agreed to delay the closure of voucher schemes for a period of at least six months, during which time it will still accept new entrants.
Existing voucher schemes help some 450,000 employed parents save up to £933 in Income Tax and National Insurance on their childcare costs per year. Whereas, TFC offers parents, including those self-employed, up to £2,000 per year per child in top-ups to parental contributions via an online scheme.
Forty-five MPs across all parties signed a letter to the Chancellor to keep the old scheme open. DUP MP Emma Little-Pengelly said while the employer-backed voucher scheme was ‘far from perfect’, there was some evidence it offered a better deal for some parents than the new TFC scheme, which has suffered a series of well-publicised technical problems in its launch.
Whilst many have welcomed the government’s surprise decision, there are concerns that many employers have already initiated changes with the April deadline looming.
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