Tax-Free Childcare is a new government scheme to help parents with the cost of childcare; allowing parents to work, or work more, if they want to.
Parents can apply for Tax-Free Childcare through the childcare service – a new online application. Once parents have opened their account for every £8 that families pay in, the government will pay in £2, up to a maximum of £2,000 per child per year (or £4,000 for disabled children). This can then be spent on regulated childcare.
To be eligible, parents must be in work (including self-employment) and each earning at least £120 per week and not more than £100,000 per year.
Rollout of the childcare service
Tax-Free Childcare was launched last April and is being opened gradually starting with parents of the youngest children first. Parents whose youngest child is 6 years old or younger on Friday 24 November can apply now.
Over the coming months, HMRC will gradually open the childcare service to parents of older children, whilst continuing to make further improvements to the system. All eligible parents will be able to apply by the end of March 2018. Parents can register to get a notification of when they can apply for Tax-Free Childcare here: https://www.tax.service.gov.uk/childcare-schemes-interest/welcome.
Parents can apply online via the childcare service at: https://www.gov.uk/help-with-childcare-costs/tax-free-childcare
Improvements to the Childcare Service
You may have read in the press that since its launch the childcare service has encountered problems. Over the summer HMRC has been working hard to make improvements to the service so that parents experience a good customer journey.
In his written statement published last month, the Financial Secretary to the Treasury said that over 275,000 parents have successfully applied through the childcare service but, that a number of parents hadn’t received the intended level of service.
HMRC understand that over the summer that some parents were having to wait a significant period of time to receive their eligibility responses. HMRC, and their delivery partners NS&I, have introduced changes to ensure that almost all parents receive an eligibility response within 5 working days but most of them receive this instantly. There will however always be occasions when HMRC need to carry out additional checks and this can take more time.
HMRC have also implemented fixes that mean the number of error screens that parents see has been vastly reduced.
Parents need to confirm that their details are up to date each quarter. Unfortunately, some parents did not receive reminders to do to this. HMRC acted quickly and contacted all those parents affected by this fault and reminded them to reconfirm. They are continuing to improve the messaging in the communications that they send out.
The dedicated childcare service helpline which helps parents with any queries wasn’t providing parents with the quality of service they expect. HMRC have made significant improvements recruiting new staff, to reduce waiting time and providing more training to ensure parents consistently receive the right advice.
Supporting parents with their childcare decisions
HMRC have created the Childcare Choices website to help parents find out about what government support with the cost of childcare they may be entitled to. The website includes a link to an easy-to-use childcare calculator where parents can enter details about their personal circumstances to see what government support is best for them. The website is available at www.childcarechoices.gov.uk
The Childcare Choices website also includes a page for childcare providers. This offers information on Tax-Free Childcare and 30 hours, as well as a toolkit of communications materials including emails, social media content and posters available for their use. The provider page is available at www.childcarechoices.gov.uk/providers/
Signing-up for Tax-Free Childcare as a childcare provider
HMRC are encouraging all regulated childcare providers to sign-up for Tax-Free Childcare now so they are able to receive payments from parents through the scheme.
All regulated childcare providers in the UK have been sent an invitation to sign-up for Tax-Free Childcare. For providers who have lost their letter, they can request a new one by calling the helpline available on 0300 123 4097.