can receive under the scheme. This is why the government has committed to carry out a post-implementation review of TFC two years after it was implemented.
• Parents currently using vouchers will see no change when the scheme is closed to new entrants in October— they will continue to be able to claim vouchers providing they remain with the same employer. If they move to a different employer they will no longer be eligible for vouchers but they may be eligible for TFC. Robust estimates for the number of employees that will change employer after October, and details of their characteristics and whether their employer would have offered vouchers, are not available. Therefore it is not possible to make an estimate of the number of parents who may be worse off if they are no longer able to access vouchers as a result of the transition to TFC. • An impact assessment was published in March 2017 on the rollout of TFC and the closure of childcare vouchers to new entrants. This assessment highlights the benefits of TFC to low income parents earning close to the National Living Wage. These parents are unable to salary sacrifice and many are therefore unable to use childcare vouchers. These working parents will, subject to the other eligibility conditions, be able to use TFC to receive support. However, most low income families will access their support via the welfare system through which the government has increased the support available from 70% of childcare costs cover under Tax Credits to 85% of costs covered under Universal Credit. The Chair of the Treasury Committee has since written a letter (20 June 2018) to the Chief Secretary of the Treasury to convey the Committee’s disappointment with the government’s response to some of their recommendations. In particular, it states that: The Committee was clear in its recommendation that the government should not close the childcare voucher scheme without knowing its impact on working parents. By carrying out a post-implementation review of Tax-Free Childcare two years after its commencement, the government will be ending childcare vouchers - a scheme that has been extremely popular with working families - without seeking to understand what the consequences will be.
As was evident from the 2017-18 HMRC Supplementary Estimate, and the OBR's November 2017 Economic and Fiscal Forecast, the uptake of Tax-Free Childcare has been 90 per cent lower than the government had expected.
The Committee again urges the government to reconsider the Committee's recommendation and commit to publishing an analysis of the take-up of Tax-Free Childcare compared to the continued use of childcare vouchers during the first year of the scheme - and the subsequent impact on households-prior to making a decision on whether to discontinue vouchers in October 2018.
The letter is publicly available; we await yet another response from government on this contentious issue.
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Employer Supported Childcare closes to new applicants 13 September 2018
On 4 October 2018, the childcare voucher scheme will close to new applicants. Employees can keep getting vouchers if they’ve joined a scheme and get their first voucher before this date.
The government has produced guidance for employers to share with their employees about Tax-Free Childcare.
What is Tax-Free Childcare? Tax-Free Childcare is a new government scheme that helps working parents with their childcare costs, allowing them to work, or work more hours, if they choose to. For every £8 a parent puts into a childcare account, the government will top up their account with £2. Parents can receive up to £2,000 per child, per year to pay for regulated childcare (£4,000 for disabled children).
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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