Tax Advisor

How to Apply for Tax-free Childcare

If you’re a working parent, chances are that you’re looking to figure out ways to get compensated for child care. Here’s a quick guide to help you get the right compensation. 


What’s Government’s Childcare Scheme? 


Working parents receive a tax-free top-up from the Government. This helps with childcare costs according to tax experts.

The top-up is worth £500 every three months (£2,000 a year). Top-up of £4,000 a year (£1,000 every three months) is available to disable childcare.


Open Up an Account Online


The first step is to open up an account online. The government provides up to £2 for every £8 deposited by the parents, up to the above limits. The money in the account is then used to pay for childcare with a registered provider.


Let’s Talk About the Eligibility Criteria


To qualify for tax-free childcare, the claimant (and their partner if they have one) should be in work, on sick leave or annual leave or on parental, maternity, paternity or adoption leave.

If you’re unemployed or self-employed, this scheme is for you.  As a claimant, you must earn a minimum of £131.36 per week on average. That’s equal to 16 hours at the National Living Wage of £8.21 per hour for 2019/20. It’s for people age 25 and over. This equates to £1,707.68 over three months.

This limit does not apply to a self-employed person who started their business within the previous three months.

There is also an earnings cap – tax-free childcare is not available where the claimant or their partner has ‘adjusted net income’ of more than £100,000. This is broadly taxable income before personal allowances, fewer items such as gift aid.


What’s Tax-Free Childcare


Tax-free childcare is available for a child who is 11 or under and who lives with the claimant. Eligibility ceases on 1 September following their 11th birthday. A disabled child remains eligible until they are 17 as per the tax advisor.


Using Tax-free childcare


Tax-free childcare can be used to pay for childcare. This includes childminders, nurseries, nannies, after school clubs, playschemes, and home care agencies. The childcare provider must sign up to the scheme.


Interaction with tax-credit and Universal Credit


Tax-free childcare is not available at the same time as working tax credit, child tax credit, or universal credit. The childcare calculator is available on the website.


Employer-supported childcare and childcare vouchers


Employees don’t benefit from both the tax-free top-up under the Government scheme. Tax exemption for employer-provided childcare vouchers or employer-supported care.

Again, what’s the best option will depend on personal circumstances. An employee within an employer scheme must tell their employer they have applied for tax-free childcare within 90 days of making the application. Talk to our tax advisor.


How to Apply


Applications for tax-free childcare can be made online at Further, consult our tax advisor for complete information on the subject. 


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