Tax Free Childcare

It wasn’t so long ago that a new childcare scheme wouldn’t have been of great interest to me. Times are a changing in the Hayden household, however, and as I write this I find myself more interested in this than I am in who Liverpool are about to sign (perhaps not, but you get my point).

Anyway, with all the election and Brexit excitement in the news over the last few months, it may have gone unnoticed that the government’s new Tax-Free Childcare scheme is now up and running. 

It is intended that the scheme will eventually replace the existing childcare voucher scheme, however, for the time being, it will run alongside this scheme, which without wishing to make anything nice and simple for parents, creates a choice as to which scheme should be used.

For those who can’t currently access the childcare voucher scheme, either because their employer doesn’t offer it, or because as a self-employed person the scheme isn’t available to them, it is going to be a simple decision. For other parents, however, they will need to evaluate which scheme is better for them.

Under the new scheme, eligible parents will open an online childcare account, with the government contributing an additional 25% when parents pay into this account, up to a maximum government contribution of £2,000 per child per year.  Parents can then use this money to pay for qualifying childcare costs.

For some, childcare vouchers will be more tax efficient (because you are actually saving tax and national insurance), however, for others, including those parents with more than one child, it may depend on how much they are actually paying for childcare costs.

To help you to decide which scheme to use there is an online calculator at and further information about this and other child related schemes can be found at

Article written by Simon Hayden