From 14th February 2018, all working parents with children under 12 can apply for up to £2,000 of childcare support per child, per year.
More than 190,000 parents have successfully applied and now have a Tax-Free Childcare account they can use to pay for a wide range of regulated childcare, including nurseries, childminders, after school or holiday clubs.
For every £8 parents pay into their childcare account the government will add an extra £2. Once eligible parents have opened their new account they can start paying their childcare provider straightaway, using the government contribution.
How Tax-Free Childcare works
- Working parents can apply, through the childcare service, to open an online childcare account. For every £8 that families pay in, the Government will make a top-up payment of an additional £2, up to a maximum of £2,000 per child per year (or £4,000 for disabled children). This top up is added instantly and parents can then send electronic payments directly to their childcare providers. The maximum government top-up is £500 per quarter for each child.
- All registered childcare providers – whether nannies, nurseries, childminders or after school clubs – can sign up online now to receive parents’ payments through Tax-Free Childcare.
- Parents need to sign back in every three months and confirm their details are up to date, to keep getting Government top-ups.
- By the end of the Parliament, we expect Tax-Free Childcare will support around a million families with their childcare costs.
- Tax-Free Childcare is replacing Employer-Supported Childcare, including ‘childcare vouchers’, which is only available to parents if their employer offers it. Employer-Supported Childcare will be closing to new entrants from April 2018, but parents who are already a member of the scheme will be able to remain in it as long as their employer continues to offer it. The tax and National Insurance exemption for workplace nurseries will remain in place. Parents moving from Employer-Supported Childcare to Tax-Free Childcare can still use childcare vouchers they’ve previously accrued.