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Tax free childcare

Broadly speaking, the new tax free childcare scheme which is expected to be introduced early this year, will help working parents with the cost of child care, and replace the current system of employer supported childcare (ESC).

Parents will be able to open an online account with a voucher provider and have their payments topped up by the government.   Importantly, for every 80 pence that families pay in, the government will put in 20 pence, up to the annual limit on costs for each child of £2,000 (£4,000 for disabled).  Parents will then be able to use the vouchers for any Ofsted regulated childcare in England.

HMRC will consider the employment status of each member of a couple who live together and both parents must be in employment.  To qualify each parent is expected to earn at least £115 a week and no more than £100,000 a year.

All working parents in receipt of childcare vouchers from their employers’ scheme will continue to receive these vouchers, with the same financial benefits.  After April 2018 the scheme will be frozen to new entrants.  It is therefore very important that working parents who would be better off in the old employer scheme are actively encouraged to join before the deadline.

If you have any questions, please contact Michael Burgess on 01782 279615.


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