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Tax-Free Childcare

Tax-Free Child­care replaced Employ­er Sup­port­ed Child­care, and has the advan­tage that the self employed, as well as employed indi­vid­u­als, can make use of the scheme. At Rus­sell & Rus­sell, we can pro­vide guid­ance on Tax-Free Child­care and Employ­er Sup­port­ed Child­care in the Lanark­shire or sur­round­ing areas.

The gov­ern­ment oper­ates a tax incen­tive for child­care Tax-Free Child­care (TFC).

Overview

Under TFC the tax relief avail­able is 20% of the costs of child­care up to a total of child­care costs of £10,000 per child per year. The scheme will there­fore be worth a max­i­mum of £2,000 per child (£4,000 for a dis­abled child). Par­ents are able to apply for TFC for chil­dren under 12 (up to 17 for chil­dren with dis­abil­i­ties).

To qual­i­fy for TFC all par­ents in the house­hold must gen­er­al­ly meet a min­i­mum income lev­el, based on work­ing 16 hours a week at Nation­al Min­i­mum Wage or Liv­ing Wages rates as appro­pri­ate and each earn less than £100,000 a year and not already be receiv­ing sup­port through Tax Cred­its, Uni­ver­sal Cred­it or the child­care vouch­er scheme.

Online account

Par­ents are able to reg­is­ter with the gov­ern­ment and open an online account. The gov­ern­ment will then ‘top up’ pay­ments into this account at a rate of 20p for every 80p that fam­i­lies pay in.

Self-employed

Self-employed par­ents are able to get sup­port with child­care costs using the TFC scheme, unlike the employ­er sup­port­ed child­care vouch­er scheme. To sup­port new­ly self-employed par­ents, the gov­ern­ment has intro­duced a ‘start-up’ peri­od. Dur­ing this peri­od a new­ly self-employed par­ent will not have to earn the min­i­mum income lev­el.

TFC and service issues

All par­ents of eli­gi­ble chil­dren can apply for both 30 hours of free child­care and TFC via a sin­gle web­site. Par­ents can apply online through the child­care ser­vice which can be accessed via the Child­care Choic­es web­site.

Childcare providers

Only child­care providers reg­is­tered with a reg­u­la­tor can receive Tax-Free Child­care pay­ments.

How does this relate to employer supported childcare?

Employ­er Sup­port­ed Child­care (ESC) closed to new entrants in Octo­ber 2018. ESC con­tin­ues to be avail­able for cur­rent mem­bers if they wish to remain in it or they can switch to TFC but par­ents can­not be in both ESC and TFC at the same time.

How we can help

If you are in the Lanark­shire area please do con­tact us for guid­ance on Tax-Free Child­care.