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The closure of Childcare Vouchers is imminent, and - from April 2018 - parents will no longer be able to join the scheme through their employer.

This is the workplace benefit that allows parents to buy childcare vouchers through a 'salary sacrifice' - to the tune of up to £55 a week, depending on their tax band.

To use it, parents can give up a certain amount of their pre-tax salary, for instance £500, and save on tax by claiming it in vouchers instead.

As a result they can save up to £933 a year each - money that would normally be paid as tax and national insurance.

However, next month, the Government will put an end to future voucher applications for the workplace benefit as the move to Tax-free Childcare continues.

Here's what you need to know.

Why it matters

(Image: OJO Images RF)

While in theory, Tax-free Childcare and Childcare Vouchers claim do the same job, there are some key differences parents should be aware of.

For instance, while childcare vouchers is available to parents with children up to the age of 15, Tax-free Childcare is only open for those up to the age of 12, rising to 17 where the child has a disability.

And while vouchers are only available to those whose employers offer it, the new scheme is open to everyone that qualifies - including the self employed.

Then there's the pay-out.

Through the workplace scheme, the maximum payout is £933 per worker to help with overall childcare.

However, through Tax-free Childcare, parents could get up to £2,000 a child (for every 80p you put in, the Government adds an extra 20p).

But - that's providing you spend £8,000 or more on childcare a year.

Tax-free Childcare vs Childcare Vouchers - which is best?

The Childcare Voucher Providers Association estimates that 70% of parents could be better off with Childcare Vouchers because tax-free Care (TFC) is not available for those already claiming child tax credits, working tax credits or universal credit .

The body explained: "It has been said that TFC is fairer and better targeted than vouchers, but this doesn’t take into account that families would lose all support under TFC if one parent was not in work for any reason - this could be an unexpected job loss or having to stop working to look after an elderly relative.

"With Childcare Vouchers, the family would still receive support where they wouldn’t with TFC via the other working parent."

Hannah Maundrell at Money.co.uk added: " The scheme you will be better off with depends on your individual circumstances.

"If you’re a single parent with childcare costs of more than £5,000 you could save £1,000 under the Tax-free childcare scheme. If you were to use the voucher scheme you’d only save a maximum of £933.

"If you’re a family with two working parents and your childcare costs more than £9,500 then you could save more using Tax Free Childcare.

"An example would be if the cost of your childcare is £10,000 you could save £2,000 under the TFC but only £1,866 under the voucher scheme.

"The TFC isn’t best for everyone and vouchers will still be more suitable for some people like two parent families where one does not work, families where either parent earns over £100,000 or families where either parent works less than 16 hours a week, so be sure you’re using the best scheme to suit you.”

Is there a cut off date?

The childcare vouchers scheme will close to new applicants in April 2018, however, if you’re already on it, you can continue to claim until your employer stops supporting the scheme - or you change jobs.

You have until 31 March 2018 to register for your employer's Childcare Vouchers scheme before you lose your right to.

Some employers will have a specific once-a-year window for those that want to join or leave their workplace benefits, such as cycle to work or season ticket loans, and childcare vouchers is one of them.

This is often at the end of the year (ie now) or in March before the end of the tax year.

What's the difference between the two schemes?

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This is the question on many parents' minds right now. Here's an outline of the pros and cons of each.

Childcare Vouchers - pros

✓ Both parents do not have to work. Childcare Vouchers offer savings per parent per year (both or just one parent can apply).

✓ Basic rate taxpayers can pay for up to £243 worth of vouchers each month, working out at £55 per week. Two working parents can get £468 worth of vouchers each month. This represents a saving of £933 a year.

✓ The vouchers have a long expiry date and are not specific to a particular child. Many can also be backdated, for up to 6 months, which means an employee can ‘save up' the vouchers for use at a later date i.e. in the summer holidays.

✓ There are no eligibility checks – anyone who is a parent or has responsibility for a child is eligible, providing their firm offers it.

Childcare Vouchers - cons

X Must be paid at all times - including during maternity or any parental leave.

X It's at the discretion of the employer - as you can only opt-in if they offer it.

X You cannot claim it if you're self employed

Tax-free childcare pros

✓ Tax-free Childcare offers savings per child per year - not per claimant.

✓ Parents will have 20% of their childcare costs each year met by the government, up to a limit of £2,000 a year per child. For every 80p you put in, the state will add 20p, effectively giving you a basic-rate tax back on what you pay.

✓ It's also available for self-employed people, as long as both parents (if they are together) are working 16-hours a week and earning at least the national living wage .

Tax-free Childcare cons

X Both adults must be in employment of up to 16 hours a week (if they are together).

X If you're a single parent, you must be working 16 hours or more and earning at least £120 a week.

X Tax-free Childcare is also unavailable to anyone who is claiming tax credits or universal credit.

X If either parent earns more than £100,000, both parents are disqualified.

Childcare Vouchers from your employer can also affect the amount of tax credits you get. This gov.uk calculator can help you decide which scheme is right for you.

The small print...

(Image: Getty Images)