GOV.UK Tax Free Childcare Announcement

Hello Employer,
HMRC Business Help and Education Emails
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From: Sarah Phillipson


The Government has today outlined how the new Tax-Free Childcare scheme will work, following last year’s consultation. This email contains information on what the scheme will mean for parents and employers. We have included a  draft email to send to your employees below.

If you currently offer childcare vouchers or directly-contracted childcare to your employees through an Employer-Supported Childcare scheme, you will be able to continue offering the scheme for existing members for as long as you want. Parents   will not be able to join your scheme – or move employers within the scheme –   once Tax-Free Childcare is introduced in autumn 2015.

Tax-Free Childcare is designed to benefit employees directly, helping working parents with their childcare costs, supporting them back into the workplace if they want to and  helping them to increase their hours in work. Key features of the new scheme, which will be introduced in autumn 2015 include:

  • Help with childcare costs for a much wider range of working parents – available to around 1.9million families.
  • Providing all eligible parents with a government  top-up of 20p for every 80p parents pay towards their childcare costs, up to a limit of £2,000 per child per year.
  • Unlike initial proposals, the scheme will now be rolled out to all eligible families with children aged under 12 within the first year of the scheme’s operation (rather than staggered over seven years).
  • With a single account provider – National Savings and Investments – the process will be simple for parents, and their money will be safe.
  • Run through flexible online childcare accounts which will allow parents to build up credit for use when they need it most, for example during school holidays.
  • Parents who are currently using the Employer-Supported Childcare scheme will be able to choose to stay in that scheme or move to Tax-Free Childcare. It will be their choice. Employers’ workplace nurseries will not be affected.

You can play a role in Tax-Free Childcare if you want to. You and your employees can familiarise   yourselves with the key benefits of the scheme by visiting GOV.UK. The Government will provide further  guidance in due course.

You may wish to send the following information to your employees:

For parents whose employer offers Employer-Supported Childcare  

The Government is introducing Tax-Free Childcare, to help parents go out to work if they want to so they can provide greater security for their family. This will be available to all eligible employees from autumn 2015. However, it is important to note that you will not lose your ESC entitlement. You will be able to choose whether you continue receiving Employer-Supported Childcare or move to Tax-Free Childcare, although a household cannot be in receipt of support through both schemes at the same time.

The Government will provide clear advice and guidance to allow you to decide which support best suits your individual circumstances.

You can carry on in the current scheme for as long as your employer continues to offer the scheme. If you move employers after autumn 2015 you will no longer be entitled for Employer-Supported Childcare – although you will be able to join the new scheme if you meet the eligibility requirements.

Workplace nurseries will not be affected by the introduction of Tax-Free Childcare.

For parents whose employer does not offer Employer-Supported Childcare 

The Government is introducing Tax-Free childcare, to help parents go out to work if they want to so they can provide greater security for their family. This will be available to all eligible employees from autumn 2015. You can register for the scheme direct with Government, open a childcare account, and receive 20 per cent support towards qualifying childcare costs, up to a limit of £2,000 Government support per child per year.

Tax-Free Childcare will be introduced in autumn 2015. The scheme will be rolled out to parents with children under 12 within the first year of the scheme’s introduction. The Government will set out further details of the scheme’s rollout in due course, in good time for you to factor in to your childcare plans. Further advice is available at GOV.UK