New childcare voucher scheme explained

The government has released details of the new childcare voucher scheme which will replace the existing childcare voucher scheme in Autumn of 2015. The aim is to extend the scheme so that around 1.9 million families can benefit from the subsidy. At present only 450,000 families benefit from the current scheme.

New childcare voucher scheme details

• The new childcare voucher scheme will launch in September 2015 and apply to children aged under 12
• For every 80p parents spend on childcare the government will add 20p
• The maximum cost of childcare covered is £10,000 per year per child i.e. the government will add a maximum of £2,000 per child a year
• There is no maximum number of children for which parents can claim
• The scheme entitlement works on a quarterly basis, so regardless of changes in the parents circumstances they will remain entitled to claim for the remainder of the given quarter
• Only one parent can claim per family
• But couples must give details of the non-claiming partner's earnings
• The scheme is open to all parents (including the self-employed) who earn under £150,000, which means the scheme can subsidise couples earning up to £299,998.98

Who does not qualify for the new childcare voucher scheme?

• Families where one parent does not work (not including those receiving Carer's Allowance, or contributory Employment and Support Allowance). The definition of work is 8 hours a week on the minimum wage, or earning around £50, or over £605 a quarter.
• Families where either parent earns £150,000 or more
• Those claiming tax credits or the universal credit, although people claiming the universal credit will have 85% of their childcare costs met by the government

What's happening to the existing childcare voucher scheme?

When the new scheme starts in 2015 parents already claiming vouchers can continue to receive vouchers under the old scheme or switch to the new scheme. However, if they change employer they will have to switch to the new scheme, plus parents can not claim under the new scheme if they are still claiming under the old - they'll have to switch if they want to.

Who are the winners and losers under the new childcare voucher scheme?

• Families with more children, and both parents working, will benefit as the maximum benefit is payable for each child, rather than one claim per parent as it is now.
• Families with both parents working and only one child could be worse off under the one claim per child rule. For example under the current scheme both parents can claim and can save up to £1,866 a year on childcare in total. Under the new scheme they will receive 20% of the cost of any childcare, so if they pay £5,000 a year the government will only help to the tune of £1,000.
• The biggest losers appear to be families where one parent decides to stay at home to help bring up their children

 (image by healingdream / FreeDigitalPhotos.net)