Tax-free childcare costs

Families are reminded that they may be able to claim for tax-free childcare costs to help pay for breakfast and after school clubs as children go back to school.

In a recent press release HMRC confirmed that Eligible families can save money on their childcare and benefit from a government top-up worth up to £2,000 every year, or up to £4,000 a year if a child is disabled. In June 2021, about 308,000 families across the UK benefited from using Tax-Free Childcare, but thousands are missing out on this opportunity.

Tax-Free Childcare is available to parents or carers who have children aged up to 11, or 17 if their child is disabled. For every £8 a parent or carer deposits into their account, they will receive a £2 top-up, up to the value of £500 every three months, or £1,000 if their child is disabled.

HMRC recognises that families’ personal circumstances have changed since March 2020 as more parents and carers are preparing to return to their workplaces. The 20% top-up is paid into the Tax-Free Childcare account and is ready to use almost instantly, meaning parents and carers can use the money towards the cost of childminders, breakfast and after school clubs, and approved play schemes.

Tax-Free Childcare is also available for pre-school aged children attending nurseries, childminders or other accredited childcare providers. Parents and carers, who are returning to work after parental leave, can apply for a Tax-Free Childcare account for that child before they need to start using it. Families can start depositing money 31 days before they return to work, maximising the potential government top-up saving.

Childcare providers can also sign up for a childcare provider account via GOV.UK to receive payments from parents and carers via the scheme.

Each eligible child requires their own Tax-Free Childcare account. If families have more than one eligible child, they will need to register an account for each child. The 20% government top-up is then applied to deposits made for each child, not household.

Account holders must confirm their details are up to date every 3 months to continue receiving the government top-up.

Latest Blog
28
Sep

HMRC warns students of tax scams

HMRC is warning university students new to the world of working to be wary of potenti...

Read More
23
Sep

NIC and Levy high jinks

No surprises when the Prime Minister announced a hefty 1.25% increase in NIC Class 1 ...

Read More
21
Sep

Government backs UK entrepreneurs with six hundred million of Start Up loans

The UK Government’s Start Up Loans scheme has now provided £600 million i...

Read More
16
Sep

What is round the corner?

Having glimpsed the light at the end of the COVID tunnel, many of us will have everyt...

Read More

CONTACT SIMON COOPER