Childcare voucher replacement: Worse off?

SavingFish

So just read the news that the government is planning a new scheme whereby parents will be able to 'reclaim up to £1200 of childcare costs' per year.

Sounds great... until you run the figures.

This is a replacement for the existing childcare vouchers scheme, due to come in from 2015. Referring to the childcare vouchers article on the mse website the existing scheme can save...
Basic (20%) Taxpayer. £55/week vouchers, max annual gain £930.
Higher (40%) Taxpayer. £28/week voucher, max annual gain £620.
Top (50%) Taxpayer. £22/week voucher, max annual gain £600.


... per parent.


Me and my wife both work and claim the maximum number of vouchers. The tax saving is worth over £1800 a year to us.


So for us this new scheme is worse?


I can think of a few groups who will be better off...
- Couples where at least one partner earns less than the personal tax allowance (and so wouldn't save any tax).
- Couples who pay less than about £4000 a year in childcare (but given the cost of childcare that only amounts to maybe 1.5 days a week.)


Am I misunderstanding? It doesn't seem to fit with the government's stated aim of 'making work pay'.

What do other people think about this new scheme? Will you be better or worse off? Or is it just a typical (of any political party) case of giving with one hand and taking with the other?

sweaty_betty

I think I'll reserve judgment until we get all the details, you never know, it might be £1200 per parent, or per child even.

I've heard it said that a change in help towards childcare costs will be made to placate those who've lost out with the changes to child benefit eligibility, so it might be weighted towards those who earn over £50K - but again I'm speculating

pnopine

I read somewhere it's per child.

My wife and I both do the voucher scheme for our daughter, it's worth about £1800 or so.

Under the new scheme, suprise suprise, we're £600 worse off....

Those who earn over 50k and recently lost benefits could be back in the cash again...

http://www.newstatesman.com/politics/2013/01/childcare-tax-breaks-risk-helping-rich-most

The only people getting better off through this government, are the upper classes.

rpc

If you have one child, but claim two lots of vouchers, you will be worse off under this new scheme.

If you have two children, you will be better off (can claim £2,400 instead of saving £1,866 now).

Judith_W

I have heard somewhere that they are only phasing out the old version of childcare vouchers so if you are better off with them as it stands, then you can carry on.

Make-it-3

Yep, if you are in the current scheme and it works out better for you, then you will be able to stick with it.