Page 12 - Addition Autumn 2017
P. 12

THE NEW TAX-FREE CHILDCARE SCHEME
At the end of April 2017, the new Tax-Free Childcare scheme
was launched by the government. Starting with parents of the youngest children and of disabled children, the government has started inviting eligible parents to contribute money towards the cost of childcare.
What is Tax-Free Childcare?
Tax-Free Childcare is a scheme through which the government tops up the funds set aside for childcare by the parents of children under the age of 12 (or 17 for disabled children). Eligible parents can set up an online account and pay in up to £8,000 a year, which the government will then top up with an additional 25%.
In addition to this, the government is doubling the 570 hours of free childcare or early education available for three- and four-year- olds, subject to the same eligibilities.
Who is eligible?
Once the staggered staging is completed the scheme will be open to all parents of children within the speci ed age bracket, providing all parents in the household:
• Earn, on average, over £120 a week
• Earn less than £100,000 a year
• Are not in receipt of either Tax Credits or Universal Credit
It is also required that the chosen childcare provider is registered or approved by a UK regulator. Parents can check online to make sure their provider quali es.
Employer-Supported Childcare Schemes
Many businesses already provide childcare schemes, often in the form of vouchers, which operate in the same way as other salary sacri ces. These schemes were not affected by the changes to the tax bene ts of many salary sacri ce schemes earlier this year and remain a bene cial route for many parents.
In cases where parents are able to choose between the two schemes the
most ef cient option is
dependent on their personal circumstance. It is not possible to be in receipt
of both bene ts, so the government has set up a calculator to help decide which option provides the greater relief. It can be found at www.gov.uk/childcare- calculator. The government has also launched the Childcare Choices website (www.childcarechoices.gov. uk) to help.
For more information on childcare and tax, or for help in providing information to your employees, get in touch with us.
12 | addition • autumn 17 • Issue 39


































































































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