- What is Tax-Free Childcare
Tax-Free Childcare is a new savings account scheme being phased in from early 2017. It will offer working families 20% support towards qualifying (approved) childcare costs. It will replace the Employer Supported Childcare Scheme, sometimes also known as the Childcare Voucher Scheme.
The scheme is available for children up to the age of 12. It will also be available for children with disabilities up to the age of 17, as their childcare costs can stay high throughout their teenage years.
To qualify, parents will have to be in work, and each earning around £115 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 scheme Employer-Supported Childcare. Any working family can use Tax-Free Childcare (including self-employed), provided they meet the eligibility requirements.
- Benefits of Tax-Free Childcare
For every 80p you (or someone else) pays into your child’s childcare savings account, the government will top up an extra 20p. This is equivalent of the tax most people pay - 20% - which gives the scheme its name, ‘tax-free’.
The government will top up the 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).
- How to apply
You’ll be able to open an online account, which you can pay into for covering the cost of childcare with a registered provider. You will also be able to check whether you are eligible for additional free hours of early years education for 3 and 4 year olds (30 hours childcare).
The scheme will be rolled out gradually to families, with parents of the youngest children able to apply first. You’ll be able to apply for all your children at the same time, when your youngest child becomes eligible. All eligible parents will be able to join the scheme by the end of 2017.
Further information - Tax-Free Childcare - 10 things parents should know
Problems accessing your childcare account?
Information from Gov.UK
- Childcare savings calculator
Not sure whether to stay with your Employer Supported Childcare or change to Tax-Free Childcare? The childcare calculator may be useful.