In March 2016, the Government confirmed their plans for a Tax-Free Childcare scheme to be rolled out gradually from early 2017. Tax-free Childcare will provide working parents and now self-employed workers with another option for tax savings on their childcare direct through the Government.
You can sign up for Tax Free Childcare now! This is a great step for working parents as this will help all those employed and now those self-employed.
Childcare vouchers will remain in place and you can register to join a scheme until April 2018, however, after this date Government plan to close access to Childcare Vouchers and will instead provide Tax Free Childcare for all.
Check here to see what help you could get with your childcare costs.
How it works
Tax-Free Childcare and 30 hours free childcare are two separate government schemes, to help parents with the cost of childcare. You can apply for both through one online application – the childcare service.
To qualify for either scheme, parents must be working and each earning at least £120 a week (on average) and not more than £100,000 each a year.
Parents can use Tax-Free Childcare alongside the 15 and 30 hours free childcare schemes in England, or any free childcare hours provided by the Scottish, Welsh or Northern Ireland governments.
Parents can’t use Tax-Free Childcare at the same time as they receive childcare vouchers, Universal Credit or tax credits. However, 30 hours free childcare can be received alongside these schemes.
When you apply, you’ll be considered for both these services through the same application. You’ll only be asked to decide which support you want if you’re on tax credits or using a childcare voucher or salary sacrifice scheme. You should check what help you could get with childcare costs, using the childcare calculator. This will help you decide which support is best for you.
Tax-Free Childcare
Parents will be able to open a new childcare account. For every £8 a parent pays into their childcare account, the government will pay in an extra £2. Parents can get up to £2000 government support per child per year towards their childcare costs – that’s up to £500 every 3 months. If they have a disabled child, they can receive up to £4000 per child – a total of £1000 every 3 months. They can then use this money to pay their childcare provider.
The government has started inviting parents to apply for Tax-Free Childcare beginning with parents of the youngest children first. Check whether Tax-Free Childcare is the best offer for you using the childcare calculator.
Parents will only be able to pay their childcare provider from their childcare account if their childcare provider is signed up to Tax-Free Childcare. While parents can’t make payments using both Tax-Free Childcare and childcare vouchers, childcare providers who are signed up to Tax-Free Childcare can receive payments from both schemes.
You’re usually eligible if all of the following apply:
Your child:
is under 12, or 17 if they’re registered as having a disability or usually lives with you.
You (and your partner, if you have one):
are 16 or over, live or work in the UK, are employed or self-employed, are over 21 and earn on average at least £120 a week, unless in your first year of self-employment. Different rates apply if you’re under 21 or an apprentice. Earn less than £100,000 a year each and don’t get other support with your childcare, including from a childcare voucher or salary sacrifice scheme
You may also be eligible if you have a partner and one of you gets any of the following benefits:
Carers Allowance, Employment and Support Allowance, Incapacity Benefit or Severe Disablement Benefit