SCOTTISH families will save costs equivalent to about £700 per child in funded early learning and childcare under new proposals by the Scottish Government.

The Children and Young People (Scotland) Bill will fund an additional 125 hours of early learning and childcare a year, benefiting around 121.000 children, including three- and four-year-olds, two-year-olds who are looked after by a local authority and two-year-olds who are under the new Kinship Care Order.

But many Scottish parents could be worse off when the Coalition Government's new scheme for childcare vouchers comes into force. The proposed Tax-Free Childcare initiative, due to start in 2015, sounds generous.

The Government would pay up to 20% of a family's annual childcare costs, capped at £1200 per child per year.

Childcare costs can put a big strain on the family budget. A nursery place for 25 hours a week for a child under two costs on average £101 a week in Scotland.

A childminder is not much cheaper at £93.

The Government estimates more than two million families could eventually be eligible for the new scheme, which will for the first time be open to the self-employed. However, the payments are only available if both parents work and do not receive help through the childcare element of working tax credits or universal credit, or if one earns more than £150,000.

The Tax-Free Childcare programme will also only apply at the outset to children under the age of five, though the Government has pledged to raise the age limit to 12 over time.

A typical family with two young children could save £2400 a year under the new scheme, but not everyone will be a winner. Couples where only one goes out to work will be particularly badly hit as they will not be eligible for the vouchers. If your child is over the age of five, you would also most likely be better off sticking with the current system, which runs until the child is 15.

Jill Rutter, research manager of the Daycare Trust, says: "Some aspects of the new scheme are welcome. But we are concerned that families with older children and couples where one parent stays at home could lose out under the plans. They would in many cases be best advised to sign up to the current voucher scheme while they can."

Parents can still apply for the current voucher scheme, Employer Supported Childcare, until the new initiative is in place, when it will be closed to new applicants. It is thought the Government will then allow the two schemes to run in parallel.

The current system enables parents to pay for childcare out of their gross salary, before any tax or national insurance, and can save a parent about £900 a year.

It usually works by "salary sacrifice". Let's say you give up £1000 of your gross salary. In return, you would receive £1000 of vouchers. If tax and National Insurance had been deducted in the usual way, your £1000 of salary would be worth about £700 in your pocket, so in effect you are £300 better off.

There is a limit on the amount you can receive in childcare vouchers through the scheme without paying tax or National Insurance Contributions.

Basic rate taxpayers who joined on or before April 5 2011 can get up to £55 a week. The limit is £28 for higher rate taxpayers and £25 for additional rate payers. The size of your family does not affect your entitlement. You can only claim up to the limit whether you have one or six children.

Parents can use the vouchers to pay for any form of regulated childcare, including a nursery, nanny or childminder. The scheme does not usually include relatives who look after a child in the child's own home, but you can check on the website of the Care Inspectorate (www.careinspectorate.com) or call 0845 600 9527 if you are unsure. The self-employed are not eligible for childcare vouchers, as the scheme is only available through an employer – though they will be eligible under the new scheme.

There is one big problem with childcare vouchers – the impact on other benefits. They can affect statutory maternity pay, sick pay and any contributions to a company pension. They can also limit your entitlement to tax credits, potentially leaving you out of pocket. You can work out which is the best option for you using the calculator on the HMRC website (www.hmrc.gov.uk).