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The New Tax-Free Childcare Scheme

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Last month saw the government launch its new tax-free childcare scheme, designed to help parents with the cost of childcare. Despite this, coverage of the new initiative has been rather sparse, so we’re here to provide you with an update and discuss the benefits available.

Launched on April 28th, the new scheme applies to children aged under 12, or up to the age of 17 for children with disabilities. Under the new scheme, parents can create an online account into which they contribute money to pay for childcare. Functioning similar to a Help to Buy ISA, the government will also provide “top-ups” of £2 for every £8 that a parent pays into an account.

This “top-up” system is extremely beneficial for parents, allowing them to receive up to £2,000 per child which increases to £4,000 for disabled children. This provides the means for parents to afford services including registered childminders, after-school clubs, play schemes and more, which is the very reason the scheme was introduced.

In order to be eligible, parents must both earn on average at least £120 per week, however the tax-free childcare is not available for parents who earn over £100,000 a year. Additionally, the scheme cannot be used alongside childcare vouchers, universal credit or tax credits but can be used with the 15 hours and 30 hours scheme.

This new initiative is the first of two launching this year. From September 2017, working parents of three and four year old children living in England will be able to apply for 30 hours of free childcare, worth around £5,000 per child. As more information on this is provided, we will be publishing updates for you on our website.

At Stipendia, we’re the experts in providing high quality and tailored payroll services and if you would like to discuss how this initiative impacts your payroll, you can get in touch with our team by calling 0845 308 2288.

Key Contact: Lynne Auton
Tel: (0845) 308 2288
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