What is Tax-Free Childcare?
Parents can open an online childcare account via the Childcare Choices website (below), which they can use to pay their childcare provider directly.
For every £8 a parent pays in, the government will pay in an extra £2. Parents can receive up to £2,000 per child, per year, towards their childcare costs, or £4,000 for disabled children – separate from funded entitlements. The offer is available for children up to the age of 12, or 17 for children who are disabled.
To qualify, both parents have to be in work, and each expecting to earn at least £120 a week – and not more than £100,000 each year.
Tax-Free Childcare can be used to pay for:
- Pre schools
- Registered childminders
- Day nurseries
- School based care (that is paid for, such as after-school clubs and breakfast clubs)
Parents can’t claim Tax-Free Childcare at the same time as claiming tax credits, Universal Credit or childcare vouchers. Childcare providers can receive payments from both Tax-Free Childcare and childcare vouchers.
Parents can only pay their childcare provider from their childcare account if their childcare provider is signed up to Tax-Free Childcare.
How does Tax-Free Childcare work for providers?
Childcare providers can sign up now for Tax-Free Childcare and have all received letters inviting them to join Tax-Free Childcare. They must do this in order to receive payments from parents through the scheme.
To sign up, childcare providers should visit Tax-Free Childcare and will need:
- The unique code included in their invitation letter.
- The bank account details for the account they wish to receive payments into.
- Their Unique Taxpayer Reference (UTR) number – or their National Insurance number, if they don’t have a UTR.
To sign up, childcare providers must first be registered or approved, with a regulating body.
Payments are made directly from a parent’s online account and will automatically include the government’s contribution, arriving in one simple transaction for providers.
For further information about the scheme, please see the Childcare Service website.