Tax-Free Childcare (TFC)
As you may be aware, from April 2017, the Government is introducing a replacement scheme for Childcare Vouchers. TFC will be different to childcare vouchers, and will not be offered through your employer. The new scheme will work very differently to the current scheme, allowing parents to claim 20p for every 80p spent on childcare costs up to a maximum of £2000 saving.
TFC will work a bit like a savings account. You pay money into an account from your net pay, so it’s taken after tax and National Insurance have been deducted. Then for every 80p you pay in, the Government adds 20p. You will need to pay in £8,000 to reach the maximum Government contribution of £2,000 per child per year.
Being eligible for TFC depends on your family situation. For many families, childcare vouchers will save you more money than Tax-Free Childcare (TFC). It’s important you know which is best for you. To make sure you have the choice of which scheme suits you best, you need to be a member of your employer’s childcare voucher scheme by April 2018.
However, as like many changes to tax efficient benefits there are many considerations to be made: The main points are:
Tax Free Childcare (TFC)
• Both parents must be working a minimum of 16 hours per week each
• Eligibility will be reassessed every 3 months
• Max age 12 (currently 15)
• You will not be eligible if claiming Universal Credit
Childcare Vouchers (CCV)
• No eligibility checks
• Taken straight from salary
• Both parents can claim via employer
• Min £20pa to remain protected within the Councils run CCV scheme
Further help to reach a decision on whether TFC or vouchers are the most cost effective for you can be found at: