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Families worse off under new tax-free childcare


Families worse off under new  tax-free childcareUnlike childcare vouchers, all parents in the household must be working to be eligible for Tax Free Childcare, which comes in from September and replaces the vouchers and also for the increase to 30 hours of childcare, due in 2017.

Voucher companies argue that because doubling the free hours will lead to families spending less on their childcare costs, many parents will not benefit fully from savings provided through Tax FreeChildcare.

Under Tax Free Childcare parents need to spend £8,000 a year on childcare to receive the maximum savings of £2,000 a year, because the Government is subsidising 20 per cent of each child's childcare costs. But with the free entitlement going up to 30 hours a week, many parents may be better off using vouchers.
For example, a parent paying £8 an hour for 40 hours a week of childcare equates to £1,387 a month. With 30 hours free, this reduces to £346 a month. If both parents used childcare vouchers, this cost could reduce further to only £125 a month. But if TFC was used this would cost £277 a month, making vouchers the better option by £1,824 a year.
Parents arebeing urged to sign up to vouchers - and for employers to start offering a voucher scheme - before they are scrapped. Parents already signed up for vouchers will have the right to choose which scheme is best for them from the Autumn and opt to move to Tax Free Childcare if their circumstances change, but cannot go back.

For more information and to find out if you will be better or worse off on the new scheme call 01254 695178

01 June 2015 by Catherine Gaunt Nursery World

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