Tax-free childcare is the new government scheme to help working parents with the cost of childcare. It is starting from 28 April this year, but there hasn’t yet been that much publicity about it. We have summarised the key points of the new system below, also see here and here for further details.

How will it work?

• Parents open an online account which they pay into and then use to pay for childcare from a registered provider.
• For every £8 the parent pays in, the Government will pay in an extra £2.
• The Government’s contribution is up to a maximum of £2,000 per child per year (or £4,000 for disabled children).
• Available for children under the age of 12 (or age 17 for children with disabilities).
• Parents have to be in work and each earning £120 a week, but no more than £100,000 per year.
• The scheme will be launched 28 April 2017 this year and will be gradually rolled out over 2017.
• Available first to parents with children under the age of two.

What about childcare vouchers?

Tax-free childcare replaces childcare vouchers. Although those who are already using childcare vouchers will be able to choose whether to use childcare vouchers or tax-free childcare.

Individual can work out if they would be better off under the childcare vouchers or tax-free childcare here.

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