Jenna McArtney
If you have children under the age of 12 who attend after-school clubs, play schemes, childminding or you are considering sending them to a summer camp, you should think about setting up a tax-free childcare account. The government adds 25% to the money that you save in the account, contributing up to £2,000 for each child, each year (a higher amount applies for children with a disability). For example, if you save £8,000, this is topped up to £10,000.
The account is then used to pay approved childcare providers. It is worth noting that it doesn’t need to be the child’s parents paying into the account. Uncles, aunts, grandparents, and others can also make payments, the government have noticed that many families who are eligible for this scheme are yet to set up their accounts.
Various factors can affect eligibility for the account, those with annual net income over £100,000 are notably excluded.
The tax-free childcare account scheme will gradually replace childcare vouchers which many employers continue to provide to employees. Childcare vouchers are free from tax and national insurance (within specified limits) and can be used to pay for childcare until the child is 16. Childcare voucher schemes can no longer be set up, although any employees who are already eligible can continue to benefit from the vouchers.