With the school summer holidays speedily approaching every working parent’s thoughts turn to childcare and the cost associated with it. HMRC have advised that working parents could be entitled to Tax-free childcare worth up to £2,000 per child per year which would pay towards regulated holiday clubs throughout the school break.
There are currently in excess of 68,000 child care providers signed up across the country.
How the Tax-free Childcare scheme works
If parents pay into their Tax-Free Childcare account regularly, they can ‘save up’ their money and use it for childcare during school holidays. For every £8 that families pay in, the government will make a top-up payment of an additional £2. The money saved can be put towards a whole range of other childcare options, including before and after school care when term time starts again in September.
Tax-free childcare covers breakfast clubs, after school clubs etc but can also be used for holiday activities too- these can range from football to dance classes and even some holiday camps. Providing the childcare provider is registered with a regulator such as Ofstead or the Tax-Free Childcare scheme.
If you have a potential provider in mind then its worth asking if they are registered.
Who is eligible?
The scheme is open to working parents including the self-employed who meet the following criteria:
- Earn between the minimum wage and £100,000 per year
- Have children aged 0-11 years old
If eligible, sign up via the Government Tax-Free Childcare site.
More information can be found at the Childcare Choices website, it takes 20 minutes to apply. You will need your National Insurance number and Unique Taxpayer Reference (UTR) if you are self-employed.
If you would like further advice on this or another financial topic contact AJR & Co Ltd.