Tax-free childcare scheme
HMRC has updated their Tax-free childcare scheme (TFCS) guidance entitled Tax-Free Childcare: Top things childcare providers should know. The TFCS will support working families with their childcare costs and will be launched in early 2017 with all eligible parents able to join the scheme by the end of next year.
HMRC is currently writing to regulated and approved childcare providers across the UK asking them to sign up online for TFCS. The scheme will only be available to childcare providers registered with a regulator (such as Ofsted). Childcare providers that need to register with a regulator should do so as soon as possible as the process can take up to 12 weeks.
The TFCS scheme will eventually be open to all qualifying parents including the self-employed. The scheme will also be available to parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave.
The scheme will be worth up to £2,000 per child each year and will be available to children under 12. For every 80p in the £1 contributed by parents an additional 20p or 20% will be funded by Government up to a maximum of £10,000. Parents will be able to have one childcare account for each qualifying child. There will be extra benefits for disabled children. In order to be eligible to use the scheme parents will have to be in work, and each earning at least £115 a week and not more than £100,000 each per year.
Parents already registered to use employer-supported childcare will be free to continue using their existing arrangements for as long as their employer offers it. The existing scheme will remain open to new applicants until April 2018. Employers can offer the employer-supported childcare scheme themselves or use a specialist voucher company to run the scheme on their behalf. For some high earners and those with older children the current voucher scheme may be more beneficial.