Tax-free childcare is the latest government scheme produced to support working parents with the cost of childcare. Launched at the end of April 2017 it is being offered to parents and helps parents save thousands of pounds a year on childcare, however many families are still unaware of the scheme.
Who qualifies for the scheme?
The scheme is accessible for families with children up to the age of 12, or 17 for children with disabilities. All eligible parents will be able to join the new scheme by the end of 2017.
What is the scheme worth?
For every £8 a parent pays in, the government will pay in an additional £2. Parents can receive up to £2,000 per child, per year, towards their childcare costs making a total amount available of £10,000. There is an extended limit of £4,000 and £20,000 this applies for families with disabled children.
How do I use the scheme?
Parents are able to open an online account at www.gov.uk, which they can pay into to meet the cost of childcare with a registered provider. Your account will give you the flexibility to pay more in some months, and less at other times.
Can anyone else pay into my account?
It’s not just the parents who can pay into the account; grandparents, other family members or employers can also pay into the scheme.
Am I eligible for an account?
To qualify for tax-free childcare, parents and partners must generally meet a minimum income level of on average £120 a week and each earn less than £100,000 a year. Unlike the current ‘employer supported childcare’ voucher scheme the tax-free childcare is intended to be more flexible for families as it does not rely on employers offering the scheme. Almost twice as many families will be able to benefit from the new scheme as any working family can use tax-free childcare, provided they meet the eligibility requirements, which also includes self-employed parents.
What if I currently receive Employer Supported Childcare?
Existing members of the ‘Employer Supported Childcare’ have the option to remain in their current scheme or change over to tax-free childcare as their child becomes eligible. It is not possible to benefit from both schemes at the same time.
Consequently, parents have an important decision to make. Some may prefer to use the new tax-free childcare scheme and some to stay where they are. The decision will depend on your own personal circumstances, but the government have created a useful comparison calculator for parents and is available on www.gov.uk/childcare-calculator .
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