Good news for (some) parents: measures to make it easier for people with school-age children to access the government’s tax-free childcare scheme were announced in the budget.
This scheme is for working families, including the self-employed, in the UK with children under 12 (under 17 if disabled). Parents open an online account to pay for registered childcare – a childminder, nursery, nanny, after-school club, playscheme and so on. However, your childcare provider must be signed up to the scheme.
For every £8 you pay in, the government adds an extra £2, up to £2,000 a year for each child. That’s up to £500 every three months. If you have a disabled child, you can receive up to £4,000 per child.
But take-up has not been great – as of December, only 205,000 families were using the scheme. In an attempt to boost these numbers, the budget documents announced a “service improvement that will make tax-free childcare compatible with school payment agents”. This basically means integrating the scheme with online school payment providers such as ParentPay, which should increase uptake, says Becky O’Connor, personal finance specialist at insurer Royal London.
ParentPay is already used by about 3 million parents to make online payments for things such as school dinners and trips. More than 11,000 schools use it.
To benefit from tax-free childcare, you must each earn a minimum amount – at least £1,707 in total over the next three months – but less than £100,000 a year. If you or your partner is on maternity or paternity leave, or unable to work due to disability or caring responsibilities, you could still be eligible.
You can use tax-free childcare all year round, including during school holidays.
Parents need to sign back in every three months and confirm that their details are up to date to keep getting government top-ups.
