Tax-Free Childcare

What is Tax-Free Childcare?     

Tax-Free Childcare is a new government scheme to help working families with their childcare costs.     

The scheme will allow parents to open online childcare accounts to pay their registered childcare providers directly. For every £8 parents pay in to these accounts, the government will add £2, and the total amount in the account can only be spent on childcare. Parents can receive up to £2,000 in government support per child, per year, or £4,000 for disabled children.     

As a childcare provider you will need to have signed up for Tax-Free Childcare to be able to receive payments from any of your customers through the scheme. 

How long will it take for payments to go through?    

The government top-up will be added into the parent’s online account on the same day, and the total amount will be available to pay for childcare.    

The accounts will use the Bacs system, so payment should only take two to three working days to arrive in your bank account. When you receive a payment from a parent, it will include both their payment and the government contribution.    

Are my customers eligible? 

Parents could be eligible for Tax-Free Childcare if they:

  • Earn at least £115 per week but less than £100,000 per year
  • Don’t receive childcare vouchers, tax credits or Universal Credit
  • And have children who are under 12, or under 17 for disabled children    

While parents can’t use Tax-Free Childcare at the same time as childcare vouchers, childcare providers who are signed up to Tax-Free Childcare can receive payments from both schemes.    

When will it be available? 

Tax-Free Childcare will be available from early 2017. It will be rolled out gradually, with parents of the youngest children able to apply first. Parents will be able to apply for all their children at the same time, as soon as their youngest child becomes eligible. All parents will be eligible by the end of 2017.      

Compensation 30 hour childcare

If you’ve been unable to access Tax-Free Childcare through your childcare account for technical reasons, you may be able to claim compensation

How do childcare professionals sign up?   

It’s very simple to sign up. You should have received a letter from the government containing your unique ID which you will need to start the online process. Once you are in the secure site you will need to:   

  • Confirm your unique taxpayer reference (UTR) number. You can find this on previous tax returns or other communications from HM Revenue and Customs; or your National Insurance number, if you are a nanny and don’t have a UTR.
  • Provide bank details for the account you wish to receive Tax-Free Childcare payments into.

Want to know more? 

This page was last updated on 11 August 2017

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