HMRC is reminding parents across the UK of the ‘Tax-Free Childcare’ initiative. A 20% childcare top-up providing eligible families with up to £500 every three months (that is up to £2000 per year, or £1,000 every 3 months if your child is disabled) This is designed to go towards the cost of holiday clubs, before and after-school clubs, childminders and nurseries, and other accredited childcare schemes.
Tax-Free Childcare is available for children aged up to 11, or 17 if the child has a disability. For every £8 deposited into an account, families will receive an additional £2 in government top-up. Adopted children are eligible, but foster children are not.
How you can use Tax-Free Childcare
You can use it to pay for approved childcare, for example:
- childminders, nurseries and nannies
- after school clubs and play schemes
Your childcare provider must be signed up to the scheme before you can pay them and benefit from Tax-Free Childcare.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said:
“The 20% government top-up offers working families help to pay for childcare, whether it’s nursery bills, after school clubs or holiday clubs”
Tax-Free Childcare is also available for pre-school aged children attending nurseries, childminders, or other childcare providers. Childcare providers can also sign up for a childcare provider account to receive payments from parents and carers via the scheme.
Your eligibility depends on:
- if you are working
- your income (and your partner’s income, if you have one)
- your child’s age and circumstances
If you are working
You can usually get Tax-Free Childcare if you (and your partner, if you have one) are:
- in work
- on sick leave or annual leave
- on shared parental, maternity, paternity or adoption leave
If you’re on adoption leave, you cannot apply for the child you’re on leave for unless you’re going back to work within 31 days of the date you first applied.
If you’re not currently working
You may still be eligible if your partner is working, and you get Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or contribution-based Employment and Support Allowance.
You can apply if you’re starting or re-starting work within the next 31 days.
You’ll need to expect to earn a certain amount over the next 3 months. This is at least the National Minimum Wage or Living Wage for 16 hours a week on average.