On 21 April 2017, the government launched two new childcare schemes for working parents.
Tax-Free Childcare is for eligible UK working families, including the self-employed, with children under twelve or under seventeen, if disabled. This is a type of savings scheme where for every £8 they pay in, the government will add an extra £2, up to £2,000 per child, per year (or £4,000 per year for disabled children).
You can’t use Tax-Free Childcare at the same time as childcare vouchers, Universal Credit or tax credits. You can use it with the 15 hours and 30 hours schemes.
There is no saving in NI under this scheme as there is the childcare vouchers. However this scheme is available to the self employed which childcare vouchers are not.
30 hours free childcare
30 hours free childcare is for eligible working families in England, with three and four year old children. This is an extra 15 hours a week of free childcare, so 30 hours in all. This extra childcare can be used flexibly over the year. Parents of children who will be under four on 31 August can apply now.
This is available at all participating nurseries, playgroups, preschool, childminders and Sure Start Children’s Centres.
Income requirement for new schemes
You and your partner’s weekly earnings must be at least £120 per week, this income can be from self employment or employment. Income can also be from investments, rental income, interest on savings or foreign income. For the self employed with variable income, as long as your three-monthly average meets the £120 per week criteria, you will qualify.
If you, or your partner, are on maternity, paternity or adoption leave, or you're unable to work because you are disabled or have caring responsibilities, you could still be eligible. If either you, or your partner, expect to earn £100,000 or more, you can’t get either scheme.
Other options if you are a limited company
If the childcare provider meets certain criteria, then you can claim for up to £243 a month if you are a basic rate taxpayer (or £124 a month if you are a higher rate taxpayer). The childcare provider must invoice the limited company for the fees, and anything over the allowable amount will need to be repaid to your limited company.
Employer-Supported Childcare, also known as the childcare voucher scheme, will remain open to new applicants until April 2018 and is an alternative to getting your childcare provider to invoice your limited company. You cannot use both Tax-Free Childcare and Employer-Supported Childcare.
You can find information about the government childcare schemes on the HM Government website Childcare Choices. The website explains how parents can pre-register or apply, and includes a link to the GOV.UK childcare calculator to show eligible families how much help is available.
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