With childcare costs continuing to be a significant expense for many working families, it’s worth checking whether you could benefit from the Tax-Free Childcare scheme.
The scheme can help eligible parents and carers with the cost of approved childcare, including nurseries, childminders, holiday clubs, breakfast clubs and after-school clubs.
It can also be a useful benefit for employers to highlight to their employees, particularly during school holidays when childcare arrangements can become more expensive.
How much could you save?
For every £8 you pay into a Tax-Free Childcare account, the government adds £2.
This could provide up to:
- £2,000 per year per child
- £4,000 per year for a disabled child
The maximum top-up is £500 every three months per child, or £1,000 for a disabled child.
Parents can open an account for each eligible child and use the money to pay registered childcare providers. The scheme can also be used alongside government-funded childcare hours, where eligible.
Interestingly, Tax-Free Childcare isn’t just for younger children. HMRC has reported a significant increase in families using the scheme for children aged eight and over.
Who is eligible?
You may be able to use Tax-Free Childcare if:
- Your child is aged 11 or under, or up to 16 if they are disabled.
- You and your partner, if you have one, meet the minimum earnings requirement.
- Neither you nor your partner earns more than £100,000 a year.
- You don’t receive Universal Credit or childcare vouchers.
There are additional eligibility rules, so it’s worth checking your circumstances before applying.
Once your account is set up, you can use the funds straight away or save them for future childcare costs. You can also withdraw unused money if you no longer need it.
Could you be eligible?
Tax-Free Childcare could make a meaningful difference to your family’s childcare costs, so it’s worth checking whether you qualify.
For full details and to apply, visit the GOV.UK Tax-Free Childcare guidance.
If you have questions about how childcare support fits into your wider financial or tax position, get in touch with our London-based accountancy team and we’ll be happy to help.
