Back in March 2014 is when HMRC first announced news of a tax-free childcare scheme. Fast forward to today, the scheme is set to launch within the forth coming months of 2017. The tax-free childcare scheme aims to provide 2 million households across the UK with sufficient childcare, enabling more parents to resume with their work lives.
Here are 8 things you need to know about the scheme:
- Activate Your Digital Account
You must have an online account. By doing so it makes receiving and paying money into your account easier and more manageable, helping you to cover the cost of childcare, as opposed to, collecting receipts and filing paperwork.
The good thing is that it allows for anyone to make payments into your account. Grandparents, employers or any other family member can make a contribution, as and when they like.
With Tax-free childcare you also have the flexibility to pay in more for some months and less in other months. This can work in your favor as the balance builds up. Allowing you to opt for childcare in the times when you may most need it, for example over the summer holiday period. - The Government Gives You Money
For every £8 you or someone pays into your account, the government will pay in an extra £2. This then becomes the equivalent of the 20% tax you would usually pay. The government can top up your account with a total of £10,000 this is equivalent to £2,000 worth of child support per year. (Or £4,000 for disabled children). - You Can Withdraw Your Money
A lot can happen within a year and if you do find that your circumstances do change, or you decide that you no longer want to pay into the account. The government will give you the option to withdraw the money which you have built up, but take into consideration they will take back their corresponding contribution. - You Must Earn At Least £115 Per Week
To qualify for this scheme you must be actively working and earning a minimum of £115 a week, and a max of £100,000 per year.
According to HMRC the design of the scheme is flexible, and is ideal for those who wish to get back into work after giving birth to a child or for those who would like to begin working part-time. In order to provide them with the resources that they need for childcare and give them the support they need. - Kids Up To The Age Of 12 Are Included
The scheme will be available for children up to the age of 12, or up to 17 for children with disabilities, as their childcare costs tend to can stay high throughout their teenage years. - The Scheme Is Also For The Self-Employed
If you are a self-employed care provider , this scheme also benefits you. And to further support those parents who are newly self-employed, the government will introduce a “start-up” period. During this time, self-employed parents won’t be required to earn the minimum income of (£115).
The scheme will also be available to those on paid sick leave, paid or unpaid maternity, paternity leave and adoption. - Perfect For Families, Not Only Employers
If you are already currently receiving Employer-Supported childcare , you can continue to do so. The Tax-Free Childcare scheme doesn’t rely solely on employers to offer this benefit to its employees. Providing that you are a working family, and meet the other eligibility requirements, this scheme will be open to you.
If you haven’t signed up yet, no need to worry. The scheme will remain open to new entrants until April 2018. Parents who have already registered by this date will be able to continue using employer-supported childcare for as long as their employer offers it. - Confirming Your Circumstances Isn’t Too Taxing!
Of course, it wouldn’t quite be a government scheme if you weren’t required to send regular updates. Using the online portal you will be able to view all the accounts of your children, and every three months, you will be required to re-confirm, and where necessary update your circumstances.