All working parents with children under the age of 12 can now apply for the government's tax-free childcare scheme – helping to save up to £2,000 per year on childcare costs. The initiative, which was first announced in March, was previously capped for children up to the age of nine, but as of Wednesday it has been extended by HMRC.
The government says that more than 190,000 parents have successfully applied for the scheme since April 2017, with eligible parents able to express their interest in the scheme by registering on the Childcare Choices website. Find out all the details on tax-free childcare and find out who is eligible below…
What is Tax-Free Childcare?
Tax-Free Childcare means that up to £2,000 will be put towards childcare costs for each child up to the age of 12. For each 80p you pay in childcare, the government will add another 20p – up to £10,000 of spending. The scheme is available for children up to the age of 12, and the tax relief is doubled for children with disabilities.
Who is eligible?
The scheme is ideal for those who work for companies that don't offer childcare vouchers, and for the self-employed. To qualify, parents will have to be employed, both adults must be earning at least £115 per week and not more than £100,000 per year, and live in England. Although both parents must be working to be eligible for the scheme, those who are temporarily absent from work such as on maternity, paternity or adoption leave are still eligible.
Parents who already receive Employer-Supported Childcare are not available to receive the new Tax-Free Childcare funding. Employer-Supported Childcare will be closing to new entrants from April 2018, however parents who are already members of the scheme will be able to remain in it as long as their employer offers it.
How does it work?
Parents must express their interest in the scheme by registering on the Childcare Choices website. Your application will be reviewed and if successful you'll be able to open an online account, provided by NS&I. You will then be able to pay into this account to cover the cost of childcare, with your payments topped up by the government.
For every £8 you pay in, the government will make a top-up payment of an additional £2, up to a maximum of £2,000 per child per year – or £4,000 for disabled children. The top-up is paid instantly and parents can then use this money to pay their childcare providers.