Tax-Free Childcare

Tax-Free Childcare:

This year the government will introduce Tax-Free Childcare, a new UK-wide scheme to help working parents pay for childcare.

What is Tax-Free Childcare?

Parents will be able to open an online childcare account, which they will use to pay for their childcare directly.

For every £8 a parent pays in, the government will pay in an extra £2. Parents can receive up to £2,000 per child, per year, towards their childcare costs, or £4,000 for disabled children – separate from funded entitlements. The offer will be available for children up to the age of 12, or 17 for children who are disabled.

To qualify, both parents will have to be in work, and each expecting to earn at least £115 a week – and not more than £100,000 each year.

Tax-Free Childcare can be used to pay for:

Pre schools

Registered childminders

Day nurseries

School based care (that is paid for, such as after-school clubs)

Parents can’t claim Tax-Free Childcare at the same time as claiming tax credits, Universal Credit or childcare vouchers. Childcare providers can receive payments from both Tax-Free Childcare and childcare vouchers.

How does Tax-Free Childcare work for providers?

Childcare providers can sign up now for Tax-Free Childcare.

Letters were sent to registered childcare providers throughout September and October, inviting them to sign up and get ready for the launch of Tax-Free Childcare. They must do this in order to receive payments from parents through the scheme.

To sign up, childcare providers should visit www.childcare.tax.service.gov.uk and will need:

The unique code included in their invitation letter.

The bank account details for the account they wish to receive payments into.

Their Unique Taxpayer Reference (UTR) number – or their National Insurance number, if they don’t have a UTR.

To sign up, childcare providers must first be registered or approved, with a regulating body. Registering with a regulator can take up to 12 weeks, so if childcare providers aren’t registered yet, they should act now.

Parents will soon be able to search for childcare providers who have signed up using an online tool. Payments will be made directly from a parent’s online account and will automatically include the government’s contribution, arriving in one simple transaction for providers.

What happens next?

Tax-Free Childcare will be gradually rolled-out to parents from early 2017. Once the scheme is introduced, parents will be able to sign up online. We will provide further details on the launch of Tax-Free Childcare in due course. In the meantime, please click here for more information on the current guidance being offered to providers and here for the top things parents should know.

If you require any support or have any questions on Tax-Free Childcare please contact HMRC at tax-free.childcaremailbox@hmrc.gsi.gov.uk.

How does Tax-Free Childcare work for providers?

Over 100,000 letters have been sent to childcare providers across the country, inviting them to sign up for the government’s new offer. They must do this in order to receive payments from parents. To sign up, childcare providers should visitwww.childcare.tax.service.gov.uk

Employer-Supported Childcare will continue to run alongside Tax-Free Childcare and the current scheme will remain open to new entrants until April 2018. Childcare providers will be able to receive payments from both Tax-Free Childcare and childcare vouchers.

For more information providers can visit the Top things providers need to know on Gov.uk and parents can visit:https://www.gov.uk/government/news/tax-free-childcare-10-things-parents-should-know.