Tax Free Childcare is an initiative launched by the government to help working parents and help parents get back to work after the birth of a child.

What is Tax Free Childcare

The tax free childcare system is available to anyone, including the self employed, where eligible parents can open up an online Childcare account and receive £2 top up from the government for every £8 they put in – that’s potentially worth £2,000 per year per child.  In other words the government are giving a 20% top up which is the tax rate that most people in the scheme pay.

Eligibility for Tax Free Childcare

Here is the criteria to be accepted into the Tax Free Childcare scheme:

  • Children must be under the age of 12 (or 17 years old for children with disabilities);
  • Parents need to be in work earning at least £120 a week;
  • You’re not eligible if either you or your partner has a taxable income over £100,000 per year;
  • Your childcare provider must be signed up to the scheme before you can pay them and benefit from Tax-Free Childcare.

How to Apply for the Tax Free Childcare

You need to open up online Childcare account which you can do here. You’ll need your details (and your partner’s, if you have one), as well as your:

You’ll then need to pay your childcare contributions into this online account as you wish, the government will make their top up into it and then you can begin making payments to your approved Child Care Provider.  You’ll need to re confirm your eligibility every 3 months but you’ll be prompted to do this within your Childcare Account.

Find an approved Child Care Provider here.

Tax Free Childcare and Tax credits, Universal Credit or Childcare Vouchers

You cannot join the Tax Free Childcare Scheme as well as claiming Working Tax Credit, Child Tax Credit, Universal Credit or Childcare vouchers.

You can choose to use the tax free childcare scheme if it is more beneficial to you and your support will stop once you have been accepted into the scheme:

  • Working Tax Credit or Child Tax Credit stops straight away
  • childcare vouchers can continue for up to 90 days

Top Tip – Apply for Tax-Free Childcare before cancelling your Universal Credit claim.

Withdrawing from your Tax Free Childcare Account

If you need to withdraw money because your circumstances change, then you can take out any money you have put in but the the government will withdraw its corresponding contribution.

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