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Article contributed by ACCA

The childcare vouchers scheme is to be replaced with a new system, to be phased in from 2015.

Childcare is expensive and for many families it can account for a significant chunk of their income. It can often mean that it makes no economic or practical sense for many to return to work after having a child and can be a barrier to families’ ability to have further children.

The news that there will be help for parents with their childcare costs is therefore extremely welcome. The sting in the tail is that this will replace the childcare vouchers scheme and is therefore a replacement for, rather than an addition to, the existing scheme.

The new scheme will provide parents with support towards their childcare, provided that they are not receiving other support through Universal Credits, equal to the greater of:

  • 20% of their childcare costs or
  • £1,200.

The above amounts are per child. The new system will be phased in from the autumn of 2015.

What will change?

Some distinctions between the existing and new schemes are as follows:

  • the new allowance is per child
  • the self-employed as well as the employed can benefit from the new system
  • more employed individuals will benefit; currently, only approximately 5% of employers participate in the childcare vouchers scheme
  • the new allowance will initially apply for children up to the age of five, increasing to 12 as the scheme is phased in; the current scheme is effective up to the age of 15
  • at present, it is estimated that 450,000 people benefit under the current arrangements, compared with an estimated 2.5m under the new system
  • under the new scheme, parents will only benefit where ‘all’ parents in a household work; this is currently not the case
  • if a parent earns more than £150,000 a year, they will not be eligible for the new scheme; this is not the case under the existing system.