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Parents can now pre-register for tax-free childcare scheme

Paloma Kubiak
Written By:
Paloma Kubiak

Millions of parents can pre-register from today for the government’s Tax-Free Childcare scheme which will officially launch at the end of April.

The Tax-Free Childcare scheme will be available to around two million households, helping families to receive £2,000 a year towards the cost of childcare for each child under the age of 12 (or under 17 for disabled children).

It officially launches on 28 April but parents can pre-register on the government’s Childcare Choices site to receive an email with details of how to apply.

The flagship scheme will be gradually rolled out over 2017 with parents of the youngest children (under two) able to apply first.

From September 2017, working parents with three and four-year-olds in England will see their free childcare entitlement double to 30 hours a week, in total worth up to £5,000 for each child.

Education secretary, Justine Greening, said: “Affordable childcare and early years education are a vital part of how we can get our children on the right path, while also helping parents to be back at work, if that is what they want. Many parents are struggling to balance the cost of childcare against the benefits of being in work and this government wants to help.”

How the new Tax-Free Childcare policy works

Parents will be able to open an online account on the website, which they can pay into to cover the cost of childcare with a registered provider.

For every 80p they or someone else pays in, the government will top up an extra 20p up to a maximum of £10,000 a year. So, that could mean the equivalent of up to £2,000 worth of support per child per year (or £4,000 for a disabled child).

The scheme is available to all working parents, including the self-employed.

To be eligible, parents have to be in full or part-time work, with each earning on average at least £120 a week (equal to 16 hours at the National Minimum or Living Wage) and not more than £100,000 each a year. They can have a combined income of over £100,000.

Parents and anyone else (for example grandparents or employers) can pay money into their childcare account when they like – they can pay in more in some months than others.

Childcare vouchers

The new Tax-Free Childcare policy is different to the current childcare voucher scheme, which closes to new entrants in April 2018. Parents registered by this date will be able to continue using the childcare voucher scheme for as long as their employer offers it and will not have to switch to the new system, unless they want to.

Unlike the current childcare voucher scheme, the Tax-Free Childcare system does not rely on employers offering the scheme to parents so this is good news for those who work for companies that don’t offer childcare vouchers or are self-employed.

HM Revenue & Customs (HMRC) confirms you cannot use the Tax-Free Childcare scheme at the same time as childcare vouchers, Universal Credit or tax credits. But you can use it with the alternative 15 hours and 30 hours schemes (see the Childcare Choices site for more on these).