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Employers continue with childcare vouchers despite new scheme

12 August 2014

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Most employers will continue to offer childcare voucher schemes after the government launches its tax-free scheme in autumn 2015, research has shown. 

This year’s budget revealed plans for a new tax-free childcare subsidy, which could be worth up to £2,000 per child for around 1.9 million working families. 

Research  has revealed that 82% of employers will continue to offer childcare vouchers, however. 

Less than 3% of employers said they would cease to provide childcare vouchers for working parents. 

And 14% were “not sure” whether they would scrap voucher schemes. 

Concerns had been raised that some employees would be worse off under the new scheme. 

Experts claim that working parents who pay basic rate tax and spend less than £5,720 on childcare may be better off in their existing childcare voucher scheme. 

And parents spending between £5,720 and £7,321 on care would be worse off if they switch to the new scheme in 2015. 

Steve Herbert, head of benefits strategy at Jelf Employee Benefits, who carried out the research, said: “As more detail has become known regarding the government’s proposals for Tax Free Childcare it has become increasingly apparent that some employees will be better off retaining their membership under an existing employer supported childcare voucher scheme. 

“It is encouraging that so many employers are now actively considering retaining such arrangements to help these employees access this vital government support towards the rising cost of childcare.”