picture of children at a childcare setting

Your questions answered about Tax-Free Childcare

As parents around the country are busy arranging their childcare for the Easter holidays and planning ahead for the rest of the year, Parenting Daily asked the policy experts at HMRC about Tax-Free Childcare and how our readers could (and should) be benefitting from it:

Q: What is Tax-Free Childcare?

A: Tax-Free Childcare is a government funded top-up scheme to help eligible families with their childcare costs and can cut thousands of pounds off their childcare bills. Working families, including those who are self-employed, can receive up to £2,000 a year per child – or £4,000 if their child is disabled – to put towards the cost of childcare. Simply put – for every £8 paid into a Tax-Free Childcare account, the government tops it up with another £2.

Q. Who is it for specifically?

A. The latest figures show over 405,000 families are benefitting from Tax-Free Childcare but thousands more could be eligible. Full eligibility can be found on GOV.UK but it’s for working parents or guardians who:

have a child or children aged up to 11. They stop being eligible on 1 September after their 11th birthday. If their child has a disability, they can receive support until 1 September after the 16th birthday
earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average
each earn under £100,000 per annum
do not receive tax credits, Universal Credit or childcare vouchers

Q. What can I use it for?

A. Tax-Free Childcare can be used for any approved childcare, so it can be used to pay childminders, nurseries and nannies, before and after school clubs and holiday clubs. Parents should check with their provider to see if they’re signed up. If not urge them to go to Childcare Choices for more details of how to sign up and what it means for them.

Q. How do parents open an account?

A It’s simple to open an account via GOV.UK and only takes about 20 minutes. Accounts can be opened at any time of the year and can be used straight away, money can be deposited at any time and used when needed. Any unused money can be simply withdrawn at any time.

Account holders will be reminded every three months to confirm their details are up to date to continue receiving the government top-up.

Q. I have more than one child in different settings – can I use it for both?

A. Yes. Each eligible child requires a Tax-free Childcare account. If families have more than one eligible child, they will need to register an account for each child. The government top-up is then applied to deposits made for each child, not household.

For more information about Tax-Free Childcare and how to register visit: https://www.gov.uk/tax-free-childcare.