Tax-free childcare

Government introducing tax-free childcare-01

As of the 28th April 2017, the Government are launching a new scheme to help parents with childcare fees. This aims to increase the level of support from 15 free hours of childcare to 30 hours. Cutting childcare costs up to £2,000 per child, or £4,000 for a disabled child.

The scheme will be introduced to families with children under the age of two initially. Although by the end 2017, the government aim to roll out the new benefit towards the two million families with three or four year olds, resulting in saving eligible working families up to £5,000 a year.

This will be open to all working parents across the UK with children under 12, or under 17 for  disabled children, due to child costs remaining high throughout their teenage years.

More than 4,000 parents are benefitting from the 30 hours already offered on a trial bases in eight different councils, off the back of its success thousands more will begin to follow in April.

In order to qualify, parents will have to be in work and each earning at least £120 a week, and no more than £100,000 each per year. This scheme is designed to be flexible for parents, who possibly want to work part-time.

Unlike the current scheme; ‘Employer-Supported Childcare’, self-employed parents will also benefit from this new child support programme. The government are also introducing a ‘start- up’ period for newly self-employed parents, where they won’t have to earn the minimum income level either. The scheme will also be available to parents on paid sick leave, paid or unpaid statutory, maternity, paternity and adoption leave.

How tax-free childcare works

For every £8 that is paid in to your online account, the Government will ‘top-it-up’ with £2. This is where the scheme gets its name ‘tax-free’ due to the government paying the addition 20%, the same price as tax.

Nannies, nurseries or even after school clubs are able to sign up in order to receive parent’s direct payments, by checking: https://childcare-provider-checker.tax.service.gov.uk/ you will be able to see if your child support provider has already signed up for tax-free childcare.

You can also visit https://www.childcarechoices.gov.uk/, here you’ll be able to research the new improvements further, ask any addition enquiries as well as opening an online childcare account.

How 30 hours free childcare works

  • Parents who register will receive a code
  • Find a placement for your child for September 2017 (the next school year)
  • The code you receive, via email, can be presented to the provider/council along with the parent’s National Insurance Number and the child’s dates of birth. Making sure that the family is entitled to free childcare, and then they will be able to reap the benefits.

References:

https://www.gov.uk/government/news/uk-families-will-soon-see-bills-cut-as-date-announced-for-the-launch-of-tax-free-childcare

https://www.gov.uk/government/news/tax-free-childcare-10-things-parents-should-know