Childcare voucher schemes allow an employee to receive childcare vouchers in lieu of up to £55 per week of their wages and no tax or national insurance will be paid on this. However, this scheme was closed to new applicants with effect from 4th October 2018 (although the scheme continues to run for successful applicants prior to that date, provided certain conditions are met).
The government has introduced a new childcare scheme, called Tax-Free Childcare. This could provide up to £500 every 3 months, up to £2000 per year, to help with childcare costs for each child. The funds must be used for approved childcare. Therefore, the childcare provider must be signed up to the scheme.
To qualify for Tax-Free Childcare, the claimant and partner must be in work for 16 hours a week. Single claimants may also apply. It is possible to claim if on sick leave, annual leave or parental leave (although it is not possible to claim for the child for whom the parental leave is being taken). If the claimant is not working but the partner is, then it may still be possible to qualify if in receipt of certain benefits or allowances.
Child(ren) are eligible up to 1st September following their 11th birthday. Adopted children are also eligible, but foster children are not. If a child is disabled, then it may be possible to qualify for Tax-Free Childcare for longer.
It is possible to receive Tax-Fee Childcare at the same time as receiving 30 hours free childcare if eligible for both. However, it is not possible to receive Tax- Free Childcare at the same time as receiving Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers (if already in receipt of childcare vouchers prior to 4th October 2018).
The HMRC website has a “childcare calculator” link, designed to help work out whether Tax – Free Childcare is the best option, as opposed to other benefits. It is also possible to apply online for Tax – Free Childcare, again through the HMRC website.
Please contact Tracy if you would like any further information on this.
