The long-awaited (and much delayed) Tax-Free Childcare scheme is set to launch in early 2017. There will be a phased roll out, allowing parents of the youngest children to apply first, and by the end of 2017, all eligible parents will be able to benefit from the scheme.
Parents will be able to claim tax relief of 20% of the costs of childcare, up to a total of £10,000 per child per year. As such, joining the scheme will be worth up to £2,000 per child (or £4,000 for a disabled child). To qualify, children must be under 12 years of age within the first year of the scheme (or up to 17 for children with disabilities).
Are you eligible for Tax-Free Childcare?
To qualify for the scheme, all parents in the household must:
- meet a minimum income level – based on working 16 hours per week at the National Living Wage
- each earn less than £100,000 a year
- not already be receiving support through Universal Credit or Tax Credits.
When the scheme launches, Parents will be able to open an online account into which they can make payments. The government will make ‘top up’ payments of 20p for every 80p that families pay in.
Good news for self-employed parents
Unlike the current Employer-Supported Childcare scheme, self-employed parents will now be able to get help with childcare costs.
If you are an employee, you will still be able to apply to join an Employer-Supported Childcare scheme until April 2018. Any parents already registered by this date can continue to use the scheme for as long as it is offered by their employer.
Employers and childcare support
If you are an employer and you currently have a scheme in place, now is a good time to review your arrangements. The decision as to whether or not it is best for your staff to remain in the existing scheme will depend on a number of factors. You can help your employees by giving them access to advice from the Childcare scheme provider.
Find out more
The government has provided a helpful list of the top 10 things you need to know about Tax-free Childcare which you can read here