Tax-Free Childcare

Tax-Free Childcare provides tax relief for individuals on their qualifying childcare costs. This factsheet considers the key principles and requirements.

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Tax-Free Childcare replaced Employer Supported Childcare, and has the advantage that the self employed, as well as employed individuals, can make use of the scheme. At Cartmill Stewart & Co, we can provide guidance on Tax-Free Childcare and Employer Supported Childcare in the Lisburn, Co. Antrim or surrounding areas.

The government has introduced a tax incentive for childcare Tax-Free Childcare (TFC).

Overview

Under TFC the tax relief available is 20% of the costs of childcare up to a total of childcare costs of £10,000 per child per year. The scheme will therefore be worth a maximum of £2,000 per child (£4,000 for a disabled child). Parents are able to apply for TFC for children under 12 (up to 17 for children with disabilities).

To qualify for Tax-Free Childcare all parents in the household must generally meet a minimum income level, based on working 16 hours a week (on average £142 a week) and each earn less than £100,000 a year and not already be receiving support through Tax Credits or Universal Credit.

Online account

Parents are able to register with the government and open an online account. The government will then 'top up' payments into this account at a rate of 20p for every 80p that families pay in.

Self-employed

Self-employed parents are able to get support with childcare costs using the TFC scheme, unlike employer supported childcare scheme. To support newly self-employed parents, the government have introduced a 'start-up' period. During this period a newly self-employed parent will not have to earn the minimum income level.

TFC and service issues

All parents of eligible children can apply for both 30 hours of free childcare and TFC via a single website. Parents can apply online through the childcare service which can be accessed via the Childcare Choices website.

HMRC acknowledges that some parents did not receive the intended level of service when using the website and that they have subsequently made significant improvements. For those parents who have had difficulties in accessing the service, compensation may be available: see childcare service compensation.

Childcare providers

Only childcare providers registered with a regulator can receive Tax-Free Childcare payments.

How does this relate to employer supported childcare?

Employer Supported Childcare (ESC) closed to new entrants in October 2018. ESC continues to be available for current members if they wish to remain in it or they can switch to TFC but parents cannot be in both ESC and TFC at the same time.

How we can help

If you are in the Lisburn, Co. Antrim area please do contact us for guidance on Tax-Free Childcare.

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Cartmill Stewart & Co., Chartered Accountants was established in 2014 and today, we continue to build on our enviable reputation for providing excellent advice and first class service to our business and personal clients alike.

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02892528710

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Cartmill Stewart & Co, House of Vic-Ryn, Moira Road, Lisburn, Co. Antrim, BT28 2RF
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Cartmill Stewart & Co, 84 Halfway Road, Banbridge, Co. Down, BT32 4HB

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