It can be worth £2,000 annually per child, towards Ofsted (or equivalent) registered nurseries, childminders, nannies, after-school clubs, play schemes and home care.
Here’s a brief step-by-step guide – for full details and calculators see my full ‘Tax Free Childcare help’ guide at www.mse.me/taxfreechildcare.
Check if you need to pay for childcare. Every parent in the UK can get funded childcare for all 3 to 4-year olds. How much you get depends on where you live.
3 and 4-year-olds get 570 hours (roughly 15 hours a week) of free childcare per year. Get an additional 15 hours a week if you earn an average of at least £131 a week (both parents in a couple must) and no one parent can have an annual salary over £100,000. Some families with a low income may also get free classes for 2-year-olds.
3 and 4-year-olds get 600 hours of childcare (16 hours a week). The Scottish Government plans to increase this by 2020 – some have already had extra hours phased in.
3 and 4-year-olds get a minimum of 10 hours a week, though in some part of Wales you can get up to 30 hours a week.
Pay for childcare and have income under £40,000?
If you’re working (in a couple both must work) and pay for childcare, then the new universal credit social security system could cover up to 85 percent of your childcare costs up to a maximum of £7,750 for one child, or £13,300 for more children.
If you pay for childcare, work (both work in a couple) and earn under £40,000, spend ten minutes on the www.mse.me/benefitscalc to check if you’re eligible.
How much you can get –if you’re entitled to it at all – depends on your individual circumstances. If you’ve expensive childcare costs, you may be due it even at higher income levels.
If you get universal credit, you won’t be able to get Tax-Free Childcare (but you’ll likely get more on universal credit anyway).
Now we get onto what this is all about. To get ‘Tax-Free Childcare’ you open up an online state run www.childcarechoices.gov.uk account and for every 80p you put into it the state adds 20p.
You can put in up to £8,000 PER CHILD per year, so up to £2,000 (£4,000 if your child is disabled) will be added for use towards Ofsted (or equivalent) registered childcare.
The gain from this boost is equivalent to the income tax paid by a basic-rate taxpayer. Higher-rate taxpayers don’t get a bigger boost.
To be eligible for it you must…
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