Government confirms childcare voucher scheme will close in October


The government has confirmed that the closure of the workplace childcare voucher scheme will be delayed until 4 October 2018.

The new closure date was announced as part of The Income Tax (Limited Exemptions for Qualifying Childcare Vouchers and other Childcare) (Relevant Day) Regulations 2018 on 29 March 2018. The new regulations specify that as of 4 October 2018, childcare vouchers and directly contracted childcare that is part of employer-supported childcare arrangements, will close to new entrants.

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

The removal of workplace childcare vouchers is to make way for the government’s tax-free childcare scheme, which was introduced from April 2017. The tax-free childcare policy will provide parents with children under the age of 12 up to £2,000 a year per child to help cover childcare costs.

The tax-free childcare scheme will run alongside the government’s free childcare initiative, which has increased the amount of free childcare available to working parents who have children aged between three and four to 30 hours a week, and support that is available through universal credit. This can cover up to 85% of childcare costs.

Since the Childcare Choices service opened, where parents can apply for tax-free childcare and the 30-hours free childcare, over 370,000 parents have applied. More than 335,000 of these users are eligible to receive 30-hours of free childcare and more than 210,000 have a tax-free childcare account.

For 2019-2020, the government is expected to spend around £6 billion on childcare support.

Elizabeth Truss (pictured), chief secretary to the Treasury, said: “The decision to phase out childcare vouchers and directly contracted childcare, and replace this support with tax-free childcare was made in 2013, and received parliamentary approval through the Childcare Payments Act 2014.

“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 until October. 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.”