Tax-Free Childcare

The Government is proposing a new Tax-Free Childcare scheme which will help around 2.5 million working families, which was one of the major announcements in the 2013 budget.

HOW MUCH HELP CAN I GET?

Eligible families will get 20% of their annual childcare costs up to £6,000 per child, paid for by the Government. This is a potential saving of £1,200 per child, per year.

WHEN DOES IT START?

The scheme will be phased in from Autumn 2015 and will replace the existing childcare vouchers programme, which is currently offered by fewer than 5% of employers.

WHO QUALIFIES?

In order to eligible for the scheme both parents must be working, or one parent works in single parent families.

The scheme is open to employed and self-employed parents.

Initially, it will cover children up to 5 years old, but will build up over time to include all children under 12.

ARE THERE ANY RESTRICTIONS?

Yes, each parent must earn less than £150,000 a year.

The scheme will be unavailable to those who receive tax credits (or Universal credit when it comes into force).

HOW WILL IT BE ADMINISTERED?

Full details of the Tax-Free Childcare will be set out following consultation but it is expected that parents will have an online account and their payments will be topped up by the Government.

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