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Tax Free Childcare Accounts

With many parents returning to work following the pandemic they should be encouraged to consider a tax free childcare account to help with their childcare costs.

With many parents working from home for part of the week tax free childcare accounts are more flexible than childcare vouchers.

Childcare vouchers continue to be available for employees who joined a qualifying scheme before 4 October 2018 and applies to children up to age 16.

Tax-free childcare can also be used at the same time as the 15 or 30 hours of free childcare in England.

 

Key points are:

  • For working families, including the self-employed, in the UK
  • Earning at least £142 per week (equal to 16 hours at the National Minimum or Living Wage) each
  • Who are not receiving Tax Credits, Universal Credit or childcare vouchers
  • With children aged 0-11 (or 0-16 if disabled)
  • For every £8 you pay into an online account, the government will add an extra £2, up to £2,000 per child per year

 

Note that the tax-free childcare scheme is not available if either partner expects to individually earn more than £100,000 a year.

For every £8 paid into an online account, the government adds an extra £2, up to £2,000 per child per year (£4,000 for disabled children).

For example, for childcare costs of £500 per child per month, the family would pay £400 into their childcare account and the government would pay in £100 per child. This would be an annual saving of £1,200 per child.

The account can be used to pay for nursery fees, breakfast clubs, after school clubs, summer camps and OFSTED registered childminders

Click here for an overview of government childcare support

 

This information is provided free of charge and in good faith, without acceptance of any future liability arising from any action or in-action by any recipient or reader.Please feel free to share this information as widely as possible and encourage people, who might benefit from these updates, to register at www.asquithand.co.uk for future updates.

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