The cost of childcare is painful. Not child birth painful, but “oh my god I can’t bring myself to look at this bill” painful.
When I worked out how much money I needed to pay per month in childcare so that I could return to work full-time, I seriously considered whether it was worth bothering to go back at all.
The only thing that helped ease the pain of those monthly bills, which exceeded £1,200 a month for just one child in nursery four days a week, was the £243 I was able to claim in childcare vouchers per month.
I particularly liked how easy it was to register and claim the cash. The amount was taken off my salary before tax every month, saving me £933 a year.
When I had my second child and she joined my eldest in nursery, our bill skyrocketed (even with 30 hours of free childcare for my three-year-old), and we cut their days to three a week. Still, it was the childcare vouchers that helped us every month.
I claimed them all through maternity leave, meaning we were able to afford to keep sending my eldest to nursery even though I wasn’t working full-time.
But the childcare voucher scheme will soon cease to be an option for working parents.
In just a few weeks the childcare voucher scheme will close to new entrants.
People who are currently registered in the scheme can continue to use it, unless they change employer after October 4.
Of course us parents aren’t being left with no childcare support at all. The government is closing the childcare voucher scheme to new entrants in favour of tax free childcare.
Why tax free childcare wouldn’t have worked for me
On the face of it, tax free childcare is brilliant. For every £8 you contribute, the government will add another £2 with a maximum saving of £2,000 per child each year to spend on childcare.
But I would not have been eligible for the scheme – and neither would thousands of other parents – which is where the problem lies.
Both parents must work in order to claim tax free childcare. My husband has switched between jobs several times over the last few years, with the odd gap in between where he wasn’t employed for a period of time.
My employer was offering the childcare vouchers, and so we were able to benefit from that money every month no matter what his employment circumstances were.
We both now are self-employed, meaning we are not be eligible for childcare vouchers and tax free childcare would be the right fit for us. But the point is, that it’s dependant on circumstances and parents should have access to both schemes, as both have different pros and cons.
How do childcare vouchers work?
Childcare Vouchers are a salary sacrifice scheme based on earnings rather than expenditure, meaning those that earn the least can claim the most support.
The vouchers support families with one parent working, and unlike tax free childcare, can also be used alongside other benefits, including Tax Credits and Universal Credit.
How does tax free childcare work?
Both parents, or a lone parent, must be in work and nor earning more than £100,000.
The benefit is available per child.
The new system provides more financial support to parents that spend more on childcare. These families must be able to spend £8,000 of their own money on childcare each year to get the headline £2,000 of support and often live in more affluent areas.
Department for Education data shows the average family in London will receive three times as much support (£905) under TFC as those in the North East (£312).
If a family’s circumstances change, for example one parent is required to leave work to care for an elderly relative, then they lose their eligibility for TFC.
Read more about the potential impact of losing childcare vouchers here.
What can you do
The fact is that the two schemes are very different and so would benefit different people, or help parents at different stages of their careers and circumstances.
This means it is important that we keep BOTH schemes open so that parents have a choice.
To find out how you can support the #savechildcarevouchers campaign, visit the campaign website.
Do you use childcare vouchers? How have they helped your family? What do you think about the proposal to scrap them?