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Deadline looms for childcare voucher applications – tax and NI relief may be lost

Tax and National Insurance relief for childcare vouchers and directly-contracted childcare will disappear for new applicants on 4 October 2018. There is still time therefore for those wishing to claim to do so, urges the Low Income Tax Reform Group (LITRG) but they must join in time for their employer to action their application and provide the voucher by the last payday before the deadline.

Tax-Free Childcare (TFC) will replace the childcare vouchers to help with childcare costs but LITRG warns that some might be better off under the old system.

Those already in receipt of childcare vouchers or had a voucher in any of the 52 tax weeks ending on or after 4 October 2018, will continue to benefit from the tax and NI relief for the foreseeable future, provided they stay with the same employer, their employer continues to offer the scheme and they do not have a gap of more than 52 weeks between vouchers.

Anne Fairpo, Chair of LITRG said: “Individuals need to check their own position carefully because whether they qualify for either the TFC or childcare vouchers scheme and how much help they can get, depends on a number of factors including hours worked, income, number of children and the amount of childcare costs.

“We urge the Government to provide a telephone support service to help people make the right choice between all of the many childcare offerings and to make improvements to the current childcare calculator.

“It can be difficult for people to work out which childcare scheme is best for them. Alongside childcare vouchers and TFC, childcare help is also provided through the tax credit and universal credit systems. In some cases, making an application for one scheme can end financial support under another and so people must ensure they check their position carefully before making any applications.

“The Childcare Choices website - the Government site - https://www.childcarechoices.gov.uk/) offers a calculator to help people make these choices but it does not currently include universal credit and it may not give accurate answers for those with more complex circumstances such as variable childcare costs. We advise people to contact a local advice agency for help to make sure they make the best decision based on their own circumstances.”

Local advice agencies can be found using this postcode tool https://advicelocal.uk/ provided by advice charity LASA.

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