What is tax-free childcare?
Under the tax-free childcare scheme, parents and carers in the UK can open a special account to save for childcare costs for children under 12.
It’s designed so that for every 80p the parent puts in, the Government will add 20p – effectively giving parents basic-rate tax back on what they pay, hence the scheme’s name.
The scheme can be used to pay for up to £10,000 of childcare per child each year, equal to an extra £2,000 per child (up to £4,000 if the child is disabled) each year.
Parents can send payments to their childcare providers directly through their tax-free childcare accounts, which is where the latest problems with the scheme have arisen.