Tax Free Childcare

Tax Free Childcare is a new UK wide government scheme covering England, Scotland, Wales and Northern Ireland to help eligible working parents including those who are self-employed with the cost of their childcare

To be eligible for the Tax-free Childcare Scheme, you must be working (and if you have a partner they must work too), and you must not be receiving support through Tax Credits or Universal Credit. If you work but your partner is unable to work because they are disabled or care for a disabled person, you are eligible for the Tax-free Childcare Scheme.

The Tax-free Childcare Scheme is not available to parents where either a single parent or either member of a couple earns over £100,000.

At present the scheme is limited to parents of children under 4 and parents of disabled children under 16. Before the end of 2017 the scheme will be expanded to also cover parents of children under 12. It will run according to the school year - so that disabled children will be eligible until the September after their 16th birthday, while other children will be eligible until the September after their 11th birthday.

For guidance on the variety of childcare offers available through the government visit the Childcare Choices website.

How does the Tax Free Childcare Scheme work?

To be eligible, parents will have to be in work, and each earning at least £120 a week and not more than £100,000 each per year.

Tax-Free Childcare doesn't rely on employers offering the scheme, unlike the current Employer-Supported Childcare (Childcare Vouchers). Any working family can use Tax-Free Childcare, provided they meet the eligibility requirements so this means that self-employed parents can benefit too. (Special arrangements have been set up to help the self-employed so please the government site for further guidance).

The scheme will also be available to parents who are on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave.

The scheme will be available for children under the age of 12 and for children with disabilities under the age of 17. You'll be able to apply for all your children at the same time, when your youngest child becomes eligible. 

You will be required to re-confirm your circumstances every three months using a simple online process.

What is a tax free childcare account?

This is an account which you can set up from the government site for each child to enable you as the parent or others such as grandparents to pay money in to whenever you like to cover the cost of childcare with a registered provider.  You will have the flexibility to pay in more some months and less in others.

If your circumstances change or you no longer wish to pay into the account, they you can withdraw any money you have built up but the government will withdraw its contribution too.

You can apply for a tax free childcare account through the Governments Childcare Choices website where you can also register to receive notification when you are eligible to apply as the scheme is rolling out across 2017.

How does the Tax Free Childcare Scheme reduce childcare costs?

Basically, for every 80p you pay towards eligible childcare, the government will top up an extra 20p. The government will top up your childcare account with 20% of childcare costs up to a total of £10,000 - the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children).

What sort of childcare can the Tax Free Childcare be used to pay for?

The tax free childcare accounts can be used to pay any regulated childcare provider.  Letters were sent by the government to all regulated and approved childcare providers in September/October 2016 inviting them to register on the Tax Free Childcare scheme in order that they could receive payments.

What do you do if you currently use Employer Supported Childcare (Childcare Vouchers)?

You do not have to switch to Tax-Free Childcare if you do not wish to. Employer-Supported Childcare will continue to run. The current scheme will remain open to new entrants until April 2018. Parents already registered by this date will be able to continue using it for as long as their employer offers it.

Can all nannies accept payment through the Tax Free Childcare Scheme?

Nannies who are registered on the Ofsted Voluntary Register, or equivalent in Wales, Scotland and Northern Ireland, can sign up to receive payments. Letters are sent by the government to all registered eligible nannies. If they do not receive this letter or have lost it they can contact the Childcare Service Helpline on 0300 123 4097 for guidance.

Getting your nanny "registered" for the Tax Free Childcare Scheme

Tips on Registering Your Nanny on the Ofsted Childcare Register or equivalent in Scotland, Wales or Northern Ireland.


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