Parents with children under twelve can now apply for the Tax-Free Childcare scheme, meaning the rollout of the scheme is complete.
The programme gives eligible parents or guardians up to £2,000 free per child towards childcare costs each year.
The scheme was launched in April last year for those with children aged under four on 31 August 2017 and was extended in November to parents of kids aged four and five.
It was initially hoped that it would be extended for children under 12 by the end of last year, but it wasn’t opened for children under nine until mid-January and children under 12 today.
Parents of children under 17 years old with a disability have been able to apply for Tax-Free Childcare since the scheme launched.
More than 190,000 parents have successfully applied for the scheme since it began, but it has been marred by several problems, including issues with the Government website.
See Tax-free childcare for more information.
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 every 80p you deposit, the state adds 20p. In total the state can add up to £2,000 per child a year (or up to £4,000 if your child has a disability) – so including what you deposit, you can use the scheme to pay for up to £10,000 of childcare per child each year.
It’s worth noting you can only get a maximum top-up of £500 every three months, but the state’s extra 20% is added at the point you put money into your Tax-Free Childcare account, not when you spend it.
So if you have seasonal costs, put money into the account throughout the year, accruing the full top-up as you go, then spend it only when you need to thus avoiding the £500 per three-month limit.
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Who is eligible and how do you apply for the scheme?
The Tax-Free Childcare scheme is now available to families with children under the age of 12.
- You and your partner must both be in work in the UK (those who are self-employed now also qualify).
- You must be 16 or over. If you’re over 21 you must earn on average at least £120 a week, unless you’re in your first year of self-employment.
- You must earn less than £100,000 a year each.
- You can’t get other support with your childcare, including from a childcare voucher or salary sacrifice scheme.
You need to sign up for an account on the Childcare Choices website.
To sign up you’ll need:
- your National Insurance number
- if you’re self-employed, your Unique Taxpayer Reference
- the date you started, or are due to start work
- details of any other Government support you get
What problems has the scheme faced?
The Tax-Free Childcare scheme has been riddled with problems, mainly affecting its website. A timeline of issues can be seen below:
What does the Government say?
Liz Truss, Chief Secretary to the Treasury, said: Tax-Free Childcare will cut thousands of pounds from childcare bills and is good news for working parents.
More parents will be able to work if they want to and this demonstrates our commitment to helping families with the cost of living.
All eligible parents with children under 12 can now apply through Childcare Choices and should take advantage of the available support.