The scheme allows you to open a special account in which you deposit money to pay registered childcare providers. For every £8 that you pay into the account, the government will pay in £2, up to £2,000 per child, per year.
Tax-Free Childcare is available for:
In order to qualify for the scheme, you and your partner, must each earn on average at least £120 per week (equal to National Minimum or the Living Wage). If either of you expects to earn £100,000 or more, you won’t be eligible for the scheme.
Despite some recent confusion, the scheme is available to those who also use the 15 hours and 30 hours free childcare scheme.
However, the scheme can’t be used at the same time as childcare vouchers, Universal Credit or tax credits.
Although it was expected that the roll-out would be completed by December 2017, HMRC has delayed the roll-out of the scheme.
At the date of writing, parents of children born on or after 24th November 2011 and those with disabled children, can apply on the HMRC Childcare Choices website. Those with older children should be able to apply in the next few months.
Tax-Free Childcare was delayed following a series of technical issues involving the HMRC website. HMRC took the decision to delay the roll-out to ensure they could make the necessary improvements to the website, to ensure applications are processed correctly and efficiently.
Before applying for Tax-Free Childcare, we would suggest reviewing all options to ensure you are using the best scheme for your circumstances.
Any employees that currently receive childcare vouchers through the Employer-Supported Childcare scheme will need to decide whether to stay on this scheme or switch to the Tax-Free Childcare scheme.
If you are a childcare provider, you will need to sign up to receive payments from a Tax-Free Childcare account.