Tax-Free Childcare - is it right for you?

Posted: Feb 7, 2018

As any parent or carer knows, childcare doesn’t come cheap. The Childcare Voucher Scheme may have lent a helping hand to many families across the country, but there are still many people who need financial assistance falling outside of its limitations.

However, all this is about to change. This spring, the voucher scheme will no longer be available to new applicants and will be replaced by Tax-Free Childcare - support which you can apply for now.

What is Tax-Free Childcare?

Instead of offering a tax-free allowance with vouchers, the new scheme will give parents the opportunity to get 20% of their annual childcare costs (up to £2,000) paid by the government, providing they fit the eligibility criteria. Essentially, it means that for every £8 you pay for childcare, the government will pay £2.

Tax-Free Childcare will change the way parents in the UK receive support as it works on a per-child basis, rather than a per-parent basis. This means than larger families as well as single-parent families will feel the benefit.

It will also be helpful for those with disabled children - under the new scheme, the government will pay up to £4,000 a year in childcare for a disabled child, until they reach the age of 17.

Using a Tax-Free Childcare account, you can use the money to pay up to 10 childcare providers directly. These could include nurseries, play schemes, registered childminders or the cost of employing a nanny.

There is no obligation to make regular payments and your money is still accessible - you can withdraw it from the account at any time. However, the government will also withdraw their £2 for every £8 you take back.

Who is eligible for Tax-Free Childcare?

You are eligible for Tax-Free Childcare if you:

● Have one or more children under the age of 12 who lives with you when the scheme begins.

● Work at least 16 hours a week at National Minimum Wage - if you are in a couple, this applies to both of you.

● Earn under £100,000 a year.

● Don’t claim tax credits.

● Use a childcare provider who is signed up to the scheme.

How will this affect my vouchers?

If you are already happily using childcare vouchers and it’s working for you, rest assured you can continue to do so while your employer chooses to run the scheme. In fact, if you feel vouchers are a great option for you, it’s still possible to sign up to this scheme before the final deadline of April 6 2018. However, you won’t be able to apply for Tax-Free Childcare at the same time.

To apply for Tax-Free Childcare set up an account with Childcare Choices. It takes roughly 20 minutes and you will need your National Insurance No. (and your partner’s, if you have one) or your Unique Taxpayer Ref. if self-employed.

Little Willows accepts childcare vouchers, tax-free childcare and government grant funding - we understand that sending your child to a quality nursery shouldn’t have to cost the earth.

For more information about the facilities and experience we offer, take a look at our Little Willows Bath and Little Willows Corsham pages.

Email: info@littlewillowsdaynursery.co.uk corsham@littlewillowsdaynursery.co.uk

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