How to save on childcare costs with the Tax-Free Childcare Scheme

What’s on offer

Through the scheme, you can get up to £500 every 3 months (up to £2,000 a year) toward childcare costs for each child up to the age of 11, or up to £4,000 (up to the age of 16) if your child is disabled.

Who can use it

You don’t need to be on a payroll to qualify – self-employed parents can use the scheme too. Your family may be eligible if:

• Your child is 11 or under (or 16 if they have a disability).
• You and your partner (if you have one) earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week on average.
• Neither or you earn over £100,000 per year.
• You’re not claiming Universal Credit or childcare vouchers.

If you are eligible for Tax Free childcare you’ll set up an online childcare account for your child. For every £8 you pay into this account, the government will pay in £2 to use to pay your provider. This money can be used for approved child care which includes childminders, nurseries and after school clubs. Your childcare provider needs to be signed up to the scheme before you can pay them, so you do need to check with them to see that they’re signed up.

It’s completely flexible: you can pay in whenever you like, use it straight away, or leave it in the account until needed. If your plans change, any unused money can be withdrawn.

How to get started

You can apply online by visiting the Tax-Free Childcare section of GOV.UK. Each child needs their own account, and the government top-up is added to each one separately.

Once your account is open, you’ll need to reconfirm your details every three months to keep the top-up payments coming.

With school holidays around the corner, now’s a good time to check if you’re eligible and set up your account – especially if you’re self-employed or running a small business and need reliable childcare to keep work flowing smoothly.

Find out more: Tax-free childcare

If you need any assistance with tax planning, please contact Danny Hockin on 023 8202 7481 or email Danny Hockin.