Do You Have a Tax Free Childcare Account?
Author: Cerith Williams (FCCA), Senior Client Manager
A reminder to families eligible for tax-free childcare that they can use the tax-free childcare scheme to help with childcare costs now children have gone back to school. HMRC are saying thousands of those eligible are currently missing out on this opportunity.
How does the scheme work?
The tax-free childcare scheme is available to parents and carers with children aged up to 11, or 17 if their child is disabled. For every £8 a parent or carer deposits into their tax-free child account, they will receive a £2 top-up to the value of £500 every three months, or £1,000 if their child is disabled from HMRC.
The tax authority states that eligible families can save money on their childcare benefit from a government top-up worth up to £2,000 every year or £4,000 a year if a child is disabled.
HMRC states that the 20% top-up is paid into the tax-free childcare account and is ready to use almost instantly, meaning parents and carers can use the money towards the cost of childminders, breakfast, and after school clubs, and approved play schemes.
Just a reminder that the tax-free childcare is also available for pre-school-aged children attending nurseries, childminders, or other accredited childcare providers. You can apply for a tax-free childcare account for that child before they need to start using it and families are able to start depositing money 31 days before they return to work.
For help with your personal tax matters, please don’t hesitate to get in touch with LHP, let’s talk.