by Bobby Mills

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by Bobby Mills

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Although both schemes help parents reduce childcare costs, they work very differently.

Childcare Vouchers were an older salary sacrifice scheme run through employers. Employees gave up part of their salary in exchange for childcare vouchers before tax and National Insurance deductions were applied.

Childcare Vouchers:
  • The scheme closed to new applicants in October 2018
  • Parents already enrolled can usually continue using it if they remain eligible
  • It was operated through employers rather than directly through HMRC
  • Savings depended on tax band and salary sacrifice arrangements
HMRC Tax-Free Childcare:
  • Is managed directly through HMRC
  • Can usually be used by self-employed and employed parents
  • Is available to new applicants
  • Works per child
  • Requires the childcare provider to be registered with the scheme
  • Payments integrated directly from Hivelink – HMRC recognised booking system.

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