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Tax Free childcare – parents information

The Tax-Free Childcare offer is a new scheme launched by the Government alongside the additional 15 hours free childcare for working parents. This scheme is designed to help working families with their childcare costs.

  • For working families, including the self-employed, in the UK
  • With children under 12 (or under 17 if disabled)
  • For every £8 you pay in, the government will add an extra £2, up to £2,000 per child per year 

What is the Tax Free Childcare Scheme?

Parents will be able to open an online childcare account to pay for their registered childcare provision directly. The scheme is available for childcare for children up to the age of 12 years and 17 years if the child has a disability.

For every £8 a parent pays into the account it will be matched by an additional £2 from Central Government. The total amount of money in the account however can only be spent on childcare.

Parents will receive up to £2,000 per child in Government support per year or £4,000 for a child with a disability. You will need to sign up for an account to ensure your provider can be paid from the fund.

The system will be quick and easy for parents and childcare professionals to apply for and use.

How do parents qualify?

Parents, if not self-employed, must be in qualifying paid work in order to be eligible for 30 hours. In January 2018, the government brought into force an amendment to the 30 hours regulations which changed the definition of being treated as in paid work from expecting to start work/return within 14 days to expecting to start work/return within 31 days. This will benefit parents by allowing them to apply earlier giving them more time to make their childcare arrangements with providers.

Parents have to be in work and each earning at least £115 per week and no more than £100k per year. This is also available to parents who are self-employed and can be in addition to employer supported childcare.

Parents must not be in receipt of childcare vouchers, tax credits or Universal Credit

How does it work? - for parents:

Parents will have an on-line account rather like a bank account.

For every £8 a parent pays into the account it will be matched by an additional £2 from Government. They will be able to monitor how much they have paid into the account and how much they have spent on each child. The top up from the Government will be added to the account on the same day the parent credits it and the whole amount will be available to spend on childcare.

How does it work? - for childcare professionals

Childcare Providers will have to sign up for Tax-Free Childcare and this will permit parents to pay directly to your bank account. Parents will find making payments from the tax free payment account will work in the same way as if they had made a payment via an online banking system.

Every child will have its unique ID number and this will enable providers to track which payments are for which child.

How do parents sign up?

Parents will be able to open an account which they can pay into for the cost of childcare with a registered provider. This account will be set up through the Government website Childcare Choices

The scheme will be rolled out to families, with parents of the youngest children able to apply first.

If you have more than one child, you will be able to apply for them all at the same time when your youngest child becomes eligible. All parents that are eligible will be able to join the scheme.

How do childcare providers sign up?

Your provider will receive a letter from Government containing their unique ID and they need this to start the online process.

Once your provider has accessed the secure site they will need to confirm their unique tax payer reference (UTR) number, and they will need to provide their bank details for the account they wish to receive the Tax-free childcare payments into.

Last Updated 13/10/2020

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