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Tax-Free Childcare

Childcare-Choices HM Govt 02 - Apply now for tax-free childcare (PNG 88KB)

Coronavirus Update re 30 hours free childcare and/or tax-free childcare (PDF 85KB)

 

Tax-Free Childcare has been rolled out to nearly two million households to help with the cost of childcare, enabling more parents to go out to work, if they want to, to provide greater security for their families.

The scheme is open to all eligible families with children under 12.  It may also be available for children with disabilities up to the age of 17.

Parents will need to reconfirm their eligibility for Tax-Free Childcare every 3 months.

Is it for me?  See the Government's Childcare Choices website.

When will the scheme launch?

The scheme has already launched.

You'll be able to open an online account, which you can pay into to cover the cost of childcare with a registered provider. This will be done through the government website, GOV.UK.

Will the government pay into my account?

You can get up to £500 every 3 months (£2,000 a year) for each of your children to help with the costs of childcare.

If you get Tax-Free Childcare, the government will pay £2 for every £8 you pay your childcare provider via an online account.

You can use it to pay for approved childcare.

You can get Tax-Free Childcare at the same time as 30 hours free childcare if you’re eligible for both.

How old can children be to be covered by the scheme?

Your child must be 11 or under and usually live with you. They stop being eligible on 1 September after their 11th birthday.

Adopted children are eligible, but foster children are not.

If your child is disabled you may get up to £4,000 a year until they’re 17. They’re eligible for this if they:

  • get Disability Living Allowance, Personal Independence Payment or Armed Forces Independence Payment
  • are registered as blind or severely sight-impaired

Who will qualify?

Parents will have to be in work, earning just over an average of £50 a week and not more than £150,000 per year.

The scheme is designed to be flexible for parents if, for example, they want to get back to work after the birth of a child or work part-time.

Who can use the Tax-Free Childcare scheme?

You and your partner

You can usually get Tax-Free Childcare if you (and your partner, if you have one) are:

  • in work - or getting parental leave, sick leave or annual leave
  • each earning at least the National Minimum Wage or Living Wage for 16 hours a week - this is £125.28 if you’re 25 or over

This earnings limit does not apply if you’re self-employed and started your business less than 12 months ago.

You’re not eligible if either you or your partner has a taxable income over £100,000.

If you’re not currently working

You can apply if you’re starting or re-starting work within the next 31 days.

If you’re on parental leave, you cannot apply for the child you’re on leave for.

You may still be eligible if your partner is working, and you get Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or Employment and Support Allowance.

Will self-employed parents be able to use the scheme?

Yes, the scheme will also be available for parents who are self-employed.

Will my employer-supported childcare cease?

If you currently receive Employer-Supported Childcare then you can continue to do so.

You do not have to switch to Tax-Free Childcare if you do not wish to. Employer-Supported Childcare will continue to run.

You will not be able to register for Employer-Supported Childcare after Tax-Free Childcare is introduced, but those already registered by this date will be able to continue using it for as long as their employer offers it.

Tax-Free Childcare will be open to more than twice as many parents as Employer-Supported Childcare.

Employers' workplace nurseries won't be affected by the introduction of Tax-Free Childcare.

Am I limited to how much I can pay in at any time?

Parents and others can pay money into their childcare account as and when they like.

This gives you the flexibility to pay in more in some months, and less at other times. This means you can build up a balance in your account to use at times when you need more childcare than usual, for example, over the summer holidays.

It's also not just the parents who can pay into the account - if grandparents, other family members or employers want to pay in, then they can.

Will this new process be complicated?

It will be light-touch and as easy as possible for you. For example, parents won't have to report any change of circumstances to HMRC; there will be a single log-in service where parents can view accounts for all of their children at once.

Parents will need to reconfirm their eligibility for Tax-Free Childcare every 3 months.

If I put money into the account, can I withdraw it again?

You'll be able to withdraw money from the account if you want to.

If your circumstances change or you no longer want to pay into the account, then you’ll be able to withdraw the money you have built up. If you do, the government will withdraw its corresponding contribution.

Your childcare provider

Your childcare provider must be signed up to the scheme before you can pay them and benefit from Tax-Free Childcare.

Check with your provider to see if they’re signed up.

If you get tax credits, Universal Credit or childcare vouchers

You cannot get Tax-Free Childcare at the same time as claiming Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers.

Which scheme you’re better off with depends on your situation. Use the childcare calculator to work out which type of support is best for you.

When support will stop

If you successfully apply for Tax-Free Childcare:

  • Working Tax Credit or Child Tax Credit stops straight away
  • childcare vouchers can continue for up to 90 days

You should apply for Tax-Free Childcare before cancelling your Universal Credit claim.

Apply for Tax-Free Childcare

You’ll need your details (and your partner’s, if you have one), including your:

  • National Insurance number
  • Unique Taxpayer Reference (UTR), if you’re self-employed

It takes 20 minutes to apply.

You can make a payment the day after you put money in your account. It usually takes 3 working days for the money to reach your provider’s account.

As part of your application, you’ll find out if you’re eligible for both Tax-Free Childcare and 30 hours free childcare. You may find out straight away, but it can take up to 7 days.

To apply visit the Gov.uk website

I have already applied for an account with HMRC - How can I access it?

30 Hours and/or Tax-free Childcare - Information for parents: How parents who have applied for 30 hours already can access their account with the HMRC Childcare Service (PDF 338KB).

 

I have had technical issues trying to access Tax-Free Childcare

If you’ve been unable to access Tax-Free Childcare through your childcare account for technical reasons, you may be able to claim compensation through the Childcare Service.  Guidance has been published by HM Revenue & Customs on 11 August 2017.

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