Families reap the benefits of Tax-Free Childcare
Families using their Tax-Free Childcare accounts to pay childcare costs are benefiting from a government top-up worth up to £500 every three months.
However thousands of families across the UK are missing the chance to save money on childcare.
The scheme allows parents or carers who have children aged up to 11, or 17 if their child is disabled, to pay their childcare provider through the scheme, and receive a 20% government top-up on any money deposited.
For every £8 per child a parent or carer deposits, they will receive £2 in top-up, up to the value of £500 every three months, or £1,000 if their child is disabled. That equals £2,000, or £4,000 for the care of a disabled child, for a whole year. The top-up is paid directly into the child’s account and is ready to use almost instantly.
As children across the UK return to school, families can use the money to pay their childcare provider including childminder fees, after school clubs or sports activities, where the childcare provider has signed up to Tax-Free Childcare. Families could also save money now to earn the government top-up and use the money to pay for childcare, summer camps and play schemes during school holidays.
Tax-Free Childcare is also available to families with pre-school aged children attending nurseries, childminders or other childcare providers.
How to access the scheme
Parents and carers can check their eligibility and register for Tax-Free Childcare via GOV.UK.
The tax-free savings on childcare costs can provide much needed financial support to families affected by the pandemic. If parents and carers’ working patterns have changed due to COVID-19 or they have received furlough payments or the SEISS grant, they may still be eligible.
Childcare providers can also sign up for a childcare provider account via GOV.UK to receive payments from parents and carers via the scheme.
For further tax or accounting advice contact AJR & Co Ltd.