Many parents wish to put their child in nursery to ensure they are gaining vital early childhood education, developing in a nurturing environment, and being cared for by reliable caregivers whilst they focus on other important responsibilities.
Though parents seek the peace of mind that nursery provides them while they work, it may come with concerns or questions about costs.
What some don’t know is that 1.3 million families in the UK are eligible for the Tax Free Childcare scheme (which offers up to £2,000 a year, per child towards childcare costs). Around 800,000 are not currently using this benefit.
With tax-free childcare available from the government, you can make your money stretch further whilst providing your children with the best possible childcare.
Tax Free Childcare Explained
Who is eligible?
- The scheme is available to all parents who work (including the self-employed) and have children aged 0-11 years (or up to 17 years if disabled).
- It is for parents who aren’t receiving Tax Credits, Universal Credit or childcare vouchers, however, eligible parents can use both Tax-Free Childcare and 30 hours funded together to support their childcare costs.
- To qualify, parents must be in work and need to earn at least national minimum wage, but less than £100,000 a year. If you’re self-employed, you’ll qualify as long you earn at least £152 a week on average over the next three months.
How does tax-free childcare actually work?
The scheme was launched in April 2017 and is the main option for parents who are in work. It replaced childcare vouchers for new applicants in October 2018.
- You need to create an online childcare account via the Government Tax-Free Childcare site. Only one parent can open the account – though both can use it.
- One of the key features of the Tax-Free Childcare scheme is that you need to reconfirm that you’re eligible at the end of each entitlement period, for your tax-free childcare to continue into the next period. The entitlement period is usually three months, but HMRC can alter the length period by up to two months.
- Parents can pay money into the account as and when they like, with flexibility to pay in more or less per month, and the ability to withdraw money from the account if you need to.
How much do I get?
- Every 80p you put into your Tax-Free Childcare account, the state will add 20p. Eligible parents can get up to £2,000 per child per year.
- As an example: If your childcare bill was £500/month, you’d multiply 500 x 0.8 to get £400. You’d put £400 into your Tax-Free Childcare account and the remaining £100 (20%) will then be topped up by the Government.
- You can use this tax-free childcare calculator to find out how much you could get towards approved childcare.
Paying your fees using Tax Free Childcare scheme
At Kids Planet, we accept payments via the Tax Free Childcare government scheme, if you are using this method of payment please can you ensure that we receive your payment for the 1st of each month.
You will be provided with a Tax Free Childcare reference when you register, please use this reference when sending in your payments. You can find further details of how to apply for Tax Free Childcare at www.childcarechoices.gov.uk.
