Tax Free Childcare Scheme
The government has recently launched a scheme for parents of children to qualify for what they’re calling Tax Free Childcare.
In simple terms, how this will work is that you will have a tax free childcare account set up in your name and for every £1 you put into the scheme, the government will put in an extra 25% up to a maximum of £2,000 per year. While this is somewhat generous, it will not operate alongside employer childcare schemes and so the benefits of it will be to individuals who are self employed and forced to pay for childcare while they work or else those who do not have access to an employer supported childcare scheme.
The scheme is open to parents of children under the age of 12. Information on how to register for this new scheme can be found on the government’s childcare support website here.
The other criteria are:
- Parents must earn on average at least £120 a week (£6,240/year)
- Parents must earn less than £100,000 a year
- Parents must not be receiving other support for childcare such as Child Tax Credit.
Unfortunately the restriction against Child Tax Credit will likely rule out most parents from getting any benefit from this scheme at all, but there may be a few caught in the upper rate band or not qualifying for child tax credit for other reasons to whom this will appeal.