The roll out of the new Tax-Free Childcare Scheme (TFC) began on the 24th April 2017. This followed a trial through which HMRC had been testing the service with a selected group of parents and childcare providers.
TFC is being rolled out on an age-based approach, allowing parents of the youngest children to enter the scheme first. Currently working parents of children aged under four years old on the 31st August 2017 can apply. Families with multiple children are able to join the scheme when their youngest child becomes eligible and at that point they will be able to recieve support for all their qualifying children. All disabled children will be prioritised and will be eligible for the TFC scheme early on in the rollout process.
By the end of 2017 the TFC scheme will be open to all eligible parents. Parents will be able to apply for both TFC and 30 hours free childcare at the same time, through a joint childcare service. Parents are able to open an online account, which they can pay into to cover the cost of childcare with a registered provider. This will be administered by National Savings and Investments rather than their employer. Parents need to re-confirm their eligibility for the scheme every three months.
The government will subsidise 20% of their childcare costs up to a total of £10,000 - the equivelant of up to £2,000 support per child, per year. So for every 80p a parent or somebody else pays into the online account, the government will top up an extra 20p.
To qualify, both parents will have to be in work, and each earning at least £120 a week and not more then £100,000 each per year. Single parents can join the TFC scheme. The scheme will also be available for parents who are self-employed. Only children under 12 will be eligible for TFC. (For children with disabilities this will be upto the age of 17.)
For more information about the TFC scheme please visit https://www.childcarechoices.gov.uk or contact the TFC team on 0300 123 4907.
Parents can continue to join the current Childcare Voucher scheme until April 2018. After this time the current Childcare Voucher scheme will be closed to new joiners. It is important to note that if you an existing member of the Childcare Voucher scheme you will be able to remain on the scheme. You will not lose your entitlement and this will be available for as long as your employer continues to offer the scheme. However, parents cannot be in receipt of support through both schemes at the same time.
Not all parents will benefit from the new scheme and you may find you are better off remaining on the current Childcare Voucher scheme. A childcare costs calculator has been developed by HMRC which allows parents to compare all childcare support available. At the end of the calculation process, you have the option to register your interest and receive updates on Tax-Free Childcare from HMRC.
The link to the calculator is - https://www.gov.uk/help-with-childcare-costs