Government proposed changes to childcare vouchers in 2015

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Government proposed changes to childcare vouchers in 2015

What will these changes mean for you as a working parent?

At Enjoy Benefits Ltd, we aim to keep our clients up to date with changes to the childcare voucher benefit. As you may be aware, in the March 2013 Budget , the Government announced plans to introduce new measures to support working parents with their childcare costs. These new proposals will come into effect in 2015 and will run alongside the existing childcare voucher scheme, which will remain in place.

The new measures will give more families access to childcare vouchers. For some parents, the new plans will mean higher savings on their childcare costs but for others the changes would make them worse off. However, parents currently using childcare vouchers will be able to continue receiving them under the existing scheme and thus maintain their higher levels of savings.

Full details of the new proposals are not yet available from the Government but below are the key points, as we are aware, at the moment:

  • The new measures will allow self-employed parents to access childcare vouchers, which is a very welcome change.
  • Parents signing up to the new plans, will only be able to get help with childcare costs for children up to the age of 5. However, parents already signed up to the existing childcare voucher scheme will be able to continue to claim vouchers to pay for breakfast clubs, after school clubs and holiday clubs for children up to the age of 15. The Government has said that they may extend the new measures to cover childcare up to the age of 12, but this would not take place until around 2020.
  • For some parents, the new proposals will allow them to receive up to 20% of their childcare costs back from the Government. To benefit, parents must set up an account with a childcare voucher provider such as Enjoy Benefits Ltd. Parents pay into their account and can purchase childcare vouchers with this money. Their account is then topped up by the Government with up to 20% of their pot – up to a maximum of £1,200 per child.
  • The new measures will only be open to single parents if they work at least 16 hours a week or to couples who both work at least 16 hours a week.
  • Parents who receive tax credits or Universal Credit will not be eligible for childcare vouchers.

    The new measures will not be available for families where one of the parents earns over £150,000 a year. However, if these families are registered with the existing childcare vouchers, they can still make significant savings on childcare costs for their children up to the age of 15.

  • Currently parents with one child in childcare can save up to £1866 a year with childcare vouchers. From 2015, this saving would drop to £1200. Couples who have only one child, who have lower childcare costs or where only one partner is working, are better under the current scheme.
  • The existing scheme allows employees and employers to make savings in national insurance. The new arrangement does not allow this saving and for some companies who use these savings to provide employees with additional benefits, this will be a big loss.
  • When the plans for 2015 are finalised, we will contact all parents we believe would be better served with the new arrangements. Anyone wishing to change will be transferred quickly and simply by us to ensure they have continuity of funds.

    As soon as further information is available, we will send out another bulletin.

    Amanda Ward

    Director.

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