Tax-Free ChildcarePosted 2014 by admin
Finding reliable, high quality, affordable childcare is a major concern for working families. For many the cost of childcare can be one of the largest parts of most working families’ household budgets.
The Tax-Free Childcare online scheme expected autumn 2015 will be available to all households in which all parents work but do not receive support through tax credits or Universal Credit.
To qualify for Tax-Free Childcare:
All parents in the household must meet a minimum income level based on working eight hours per week at the National Minimum Wage. Based on the current rate of the National Minimum Wage, parents would each have to earn just over £50 a week on average to qualify for Tax-Free Childcare.
All parents in the household must each earn less than £150,000 a year.
The scheme will be available for parents who are self-employed, unlike the current scheme (Employer-Supported Childcare) which is not available to self-employed parents.
The scheme will also be available to parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave.
Parents will register with the Government and open an online account which parents can pay into to cover the cost of childcare with a registered provider. The Government will then ‘top up’ payments into this account at a rate of 20p for every 80p that families pay in, subject to a limit of £2,000 Government support per child per year. This is the equivalent of basic rate tax relief on childcare costs up to £10,000.
Tax-Free Childcare is expected to be introduced in autumn 2015. From introduction, all children up to age 5 and disabled children under the age of 17 will be eligible. The scheme will then build up over its first year to include children under 12.