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Breaking News March 14th 2018 Childcare scheme gets six-month reprieve

14 Mar 2018

Education Secretary Damian Hinds made the concession during a Commons debate yesterday March 13th.

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Childcare Vouchers to be the saviour of unworkable parenting costs!


It has recently been reported across the board that Childcare costs are rising. Reports state that costs are rising from anywhere between £600 and £1,400 per year for child care, which has led to suggestions that some parents simply won't be able to afford to work!

The figures (produced by the Social Market Foundation) show that some parents will end up spending approximately 8% of their earnings on childcare by 2015. There is no limitation based upon earnings either. In fact higher earners can expect to pay about £1,400 per year more, with middle income families paying £900, and lower income families paying £600. Families in the higher income bracket are likely to be thinking twice about whether they can justify paying for childcare at this rate, as the increase is the equivalent of 42%!

What options do parents have?

Clearly parents will be looking at all of the options that are available to them, such as child tax credits, childcare vouchers, and even utilising friends and family who can help out.

Child Tax Credits were under scrutiny this year, as it was announced that they would be cut. This was on top of suggestions that some parents may be forced to return to work after their child starts school. It was also announced that the way childcare vouchers would operate would change in April 2011. The rethink did seem sensible with lower earners gaining as much benefit as higher earners, which was not the case previously.

Lower earners are entitled to higher amounts of working tax credits than higher earners; in fact in some cases, if you utilise Childcare Vouchers via a salary sacrifice scheme, you will effectively earn less so may increase your entitlement to Child Tax Credits!

What are Tax Credits?

Tax Credits are available if you are a single parent working more than 16 hours a week, or a couple who are both working more than 16 hours a week, and your household income is below £42,000. The idea of the scheme is to encourage parents to work, as opposed to it being unaffordable to work.

What are Childcare Vouchers?

Childcare Vouchers are available if you are a working parent, and your children are below 15. They become especially useful if you are unable to claim child tax credits or have Childcare Costs of £175 per week for one child or over £300 for two or more children.

The vouchers allow working parents to pay for childcare. They can be used up to a certain amount each month, and are tax and national insurance free. Often the scheme works as a salary sacrifice scheme, meaning the working parent will give up part of their salary in return for the vouchers. If the parent was simply to take their own salary and pay for childcare, there could be no tax free element under current rules, hence the scheme has to be salary sacrifice. This should leave parents better off, although it is possible to use the HMRCs calculator on their website to find out for sure.


To summarise, utilising benefits such as the ones above, are going to be vital to parents, both now and in the foreseeable future, as cuts are taking place in every area of the budget. The recession looks as though it is likely to ensure that benefits are frozen, and parents would be wise to know their rights in terms of offsetting the cost of childcare.


Author: Eoin Olivers photo

Author: Eoin Oliver

Eoin Oliver is a web designer and blogger with six years of experience writing content and designing graphics for clients large and small. For the past three years Eoin has been focused on researching and writing about the childcare voucher scheme. When not hard at work, Eoin can be found in the company of his 4-legged companion Layla.

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