Tax-Free Childcare is a new UK-wide government scheme to help working parents with the cost of childcare, and can be used to pay for:
- Registered childminders
- Day nurseries
- School based care (that is paid for, such as after-school clubs)
Parents who are eligible will be able to open an online childcare account. This childcare account can only be used by parents to pay for registered childcare, but only if their childcare provider has signed up to the scheme. For every 80p parents pay into this account, the government will pay in an additional 20p (up to a maximum of £2,000 per child per year, or £4,000 for disabled children).
Parents can pay into their childcare account whenever they want, allowing them to build up a balance in their account for when they need more childcare than usual; such as during the summer holidays.
If parent’s circumstances change, then they will be able to withdraw the money they have built up. If parent’s do this, the government will withdraw its corresponding contribution. Parent’s will also be asked to reconfirm their eligibility every 3 months.
Parents can’t claim Tax-Free Childcare at the same time as claiming Tax Credits, Universal Credit or Childcare Vouchers.
Parents who apply for Tax-Free Childcare, won't be able to get:
- Child Tax Credit
- Working Tax Credit
- Universal Credit
- Childcare Vouchers from your employer
Child Tax Credit and Working Tax Credit payments will stop automatically if a parent successfully applies for Tax-Free Childcare.