Ten things to know about the new
Tax-Free Childcare scheme.
Tax-Free Childcare will be available to around 2 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.
Ten things to know
about the scheme:
1. You’ll be able to open an online
account
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.
Tax-Free Childcare
will be launched from early 2017. The scheme will be rolled out 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.
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 at least £115 a week and not more than £100,000
each 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.
5. Any eligible working family can
use the Tax-Free Childcare scheme - it doesn’t rely on employers offering it
Tax-Free Childcare
doesn’t rely on employers offering the scheme, unlike the current scheme
Employer-Supported Childcare. Any working family can use Tax-Free Childcare,
provided they meet the eligibility requirements.
6. The scheme will 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.
The scheme will be
available to parents on paid sick leave and paid and unpaid statutory
maternity, paternity and adoption leave.
7. 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. The current scheme will remain open to new
entrants until April 2018. Parents already registered by this date will be able
to continue using it for as long as their employer offers it.
However, 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.
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
The process will be
as easy as possible for you. For example, you’ll re-confirm your circumstances
every 3 months using a simple online process; and there will be a simple log-in
service where parents can view accounts for all of their children at once.
10. 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.
More information
will be available ahead of the scheme being introduced so parents making
childcare decisions are able to consider all their options.
