The government's new Tax-Free Childcare scheme enables eligible working families to save 20% of their childcare costs. It will be rolled out over the first year to all working parents with children under 12 or up to 17 for children with a disability. Currently only parents of children born on or after 15 January 2009, and parents of disabled children can apply.
Below is a list of our most frequently asked questions about the scheme. You can find additional information about Tax-Free Childcare on the gov.uk website.
- Who is eligible to use the scheme?
- How much can I save?
- How can I register for the scheme?
- If my circumstances change will I be able to withdraw the money from the account?
- Will the new scheme replace childcare vouchers?
- Would I be better off using Tax-Free Childcare instead of childcare vouchers?
- Can my childcare provider register for the scheme if they already accept childcare vouchers?
Who is eligible to use the scheme?
The scheme will be available for working families where:
- both parents are in work or it is a single parent household
- each parent earns a minimum of around £115 a week and not more than £100,000 a year
- parents aren't already receiving support through Tax Credits or Universal Credit
It can also be used by parents who are:
- self-employed (newly self-employed parents will not have to earn the minimum income levels during their 'start-up' period)
- on paid sick leave
- on paid or unpaid statutory maternity, paternity or adoption leave
How much can I save?
For every £8 you or someone else pays in to the account the government will add another £2 up to a maximum of £2,000 per child per year (or £4,000 for disabled children). This means that families will receive an extra £20 for every £100 they save towards childcare costs.
How can I register for the scheme?
The scheme is currently only open to parents of children born on or after 15 January 2009, and parents of disabled children but will start to be rolled out to children over nine from February 2018.
Once you can access the scheme you will be able to open an online account through the government website gov.uk. The account can then be used to pay in money to use towards your childcare costs with a childcare provider who has also registered for the scheme. Grandparents, other family members and employers will also be able to pay into the account if they choose.
If my circumstances change will I be able to withdraw the money from the account?
If your circumstances change or you no longer want to pay into the account you will be able to withdraw the money you have saved. However, the government will withdraw its contribution towards your savings as you will no longer be eligible to receive it
Will the new scheme replace childcare vouchers?
Parents will no longer be able to register for childcare vouchers after April 2018. However, if you are already using childcare vouchers you can choose to continue to use these instead of joining the new scheme.
Would I be better off using Tax-Free Childcare instead of childcare vouchers?
This would depend on factors such as how much you earn, what your childcare costs are and the age of your children. However, if you use the childcare calculator on the gov.uk website it can give you an estimate of each scheme to help you make a comparison between them.
Can my childcare provider register for the scheme if they already accept childcare vouchers?
While parents can't make payments using both Tax-Free Childcare and childcare vouchers, childcare providers who are signed up to Tax-Free Childcare are able to receive payments from both schemes.