Ryan Mackie
The Government’s Tax-Free Childcare Accounts offer a 25% boost towards childcare costs. You can use these accounts to pay for nursery fees, breakfast clubs, after-school clubs, and registered childminders.
Here’s how it works: For every £8,000 you save per child, the Government adds an extra 25%, which could mean up to £2,000 more a year for qualifying childcare. This scheme usually covers children under 12. For disabled children, the age limit is 16, and you can save up to £16,000 a year, with the Government adding 25%, potentially giving you up to £20,000.
Unlike childcare vouchers, which some employers offer, Tax-Free Childcare Accounts are available to both employees and the self-employed. To qualify, you generally need to be working and earning at least the National Minimum Wage or National Living Wage for an average of 16 hours a week. However, if either parent earns more than £100,000 a year, you will not be eligible.
If your employer provides Childcare Vouchers, you can’t set up a Tax-Free Childcare Account at the same time. If you’re considering whether to leave your employer’s voucher scheme to set up a Tax-Free Childcare Account, keep in mind that vouchers can be used for children up to age 16, whereas the Tax-Free Childcare scheme applies only up to age 12.
If you’re unsure whether switching from your employer’s Childcare Voucher Scheme to a Tax-Free Childcare Account would be beneficial, please get in touch with us for advice.