This new scheme will be rolled out to parents next year. The scheme will be made available gradually to families, with parents of the youngest children able to apply first. You’ll be able to apply for all your children at the same time, when your youngest child becomes eligible. All eligible parents will be able to join the scheme by the end of 2017.
In the meantime, HMRC are gearing up to advise childcare providers to register to use the scheme.
The top ten things that parents should know about Tax-free Childcare have recently been updated and are reproduced below:
1. 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.
2. For every 80p you or someone else pays in, the government will top up an extra 20p. This is equivalent of the tax most people pay – 20% – which gives the scheme its name, ‘tax-free’. The government will top up the account with 20% of childcare costs up to a total of £10,000 – the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children).
3. The scheme will be available for children up to the age of 12. It will also be available for children with disabilities up to the age of 17, as their childcare costs can stay high throughout their teenage years.
4. To qualify, parents will have to be in work, and each earning around £115 a week and not more than £100,000 each per year.
5. Any eligible working family can use the Tax-Free Childcare scheme – it doesn’t rely on employers.
6. The scheme will also be available for parents who are self-employed. Self-employed parents will be able to get support with childcare costs in Tax-Free Childcare, unlike the current scheme (Employer-Supported Childcare) which is not available to self-employed parents. To support newly self-employed parents, the government is introducing a ‘start-up’ period. During this, self-employed parents won’t have to earn the minimum income level.
7. If you currently receive Employer-Supported Childcare then you can continue to do so; you do not have to switch to Tax-Free However, Tax-Free Childcare will be open to more than twice as many parents as Employer-Supported Childcare.
8. 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.
9. The process will be as simple as possible for parents. A bespoke online process will be provided.
10. You’ll be able to withdraw money from the account if your circumstances change or you no longer want to pay into the account. If you do make withdrawals, the government will withdraw its corresponding contribution.
Source: New feed