It’s back to school across most of the UK this month, and HMRC is encouraging working families to check if they could save money on childcare. Please consider if sharing this information and links with your staff might be helpful to them.
Tax-Free Childcare
Tax-Free Childcare is a UK government scheme that helps working parents and carers with childcare costs. Unlike the previous scheme of childcare vouchers (which involved the employer), parents pay money into an online childcare account, and the Government adds £2 for every £8 paid in. This effectively gives families a 20% top-up towards the cost of childcare. Eligible families can receive up to £2,000 a year per child (or £4,000 for a disabled child).
To qualify, parents usually need to be working and meet minimum earnings requirements, and neither parent can have adjusted net income above £100,000 per year. Children are eligible until the September after they turn 11, or until the September after they turn 16 if the child is disabled.
HMRC’s latest figures show families using Tax-Free Childcare saved themselves an average of almost £100 a month, with increasing numbers using the scheme to help cover the cost of school-age childcare. The number of families using Tax-Free Childcare for children aged 8 and over has risen by more than 20% compared with the previous year.
The scheme can be used for approved childcare, including breakfast clubs, after-school clubs and holiday clubs.
Families can check their eligibility and apply for the scheme online. Parents cannot claim Tax-Free Childcare at the same time as claiming Universal Credit or if they are still receiving childcare vouchers or directly contracted childcare.
Free childcare for younger children
Working parents in England with children aged between 9 months and 4 years may be able to get 30 hours of free childcare. (There are separate schemes for parents resident in Scotland, Wales and Northern Ireland.)
Eligible families in England can receive up to 30 hours of funded childcare per week for 38 weeks of the year – or 1,140 hours annually.
Similar to Tax-Free Childcare above, to qualify parents usually need to be working and meet minimum earnings requirements, and neither parent can have an adjusted net income above £100,000 per year.
The childcare can be used with approved providers such as nurseries, pre-schools and registered childminders. Parents must apply for a childcare code and reconfirm their eligibility every three months.
The schemes in other parts of the UK have different criteria, both in terms of the income requirement and the ages of children where free childcare is available.
Summary
There are a range of support measures for working families, and sharing HMRC guidance and calculators can help to make sure that everyone benefits from their full entitlements.
This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.
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