Are you aware that there are different schemes available to help towards your childcare costs? To find out which is the best option for you, please read below.
What do I need to know?
If you are a working parent, then you are eligible to claim a tax-free top up from the Government to help with childcare costs.
You could be given a top-up which will be worth £2,000 a year.
There is a higher top up of £4,000 a year available for disabled children.
If you want to receive the top-up, then you must open an account online and the government will provide a top-up of £2 for every £8 deposited by the parents, up to the limits above.
The money in the account will then be used towards paying for childcare with a registered provider.
Does it apply to me?
The government childcare scheme is open to both the employed and the self-employed.
To be eligible you and your partner must earn a minimum of £131.36 per week. This totals up to £1,707.68 over three months.
The limit above does not apply if you are self-employed and started your business within the last three months.
If you or your partner have a combined income of more than £100,000 then you will not be eligible for tax-free childcare.
What are the conditions?
Tax-free childcare is only available to children who are aged 11 and under and live with the claimant.
Children are not eligible for the scheme once the 1 September following their 11th birthday has passed.
Disabled children remain eligible for tax-free childcare until they are 17.
Tax-free childcare can only be used to pay for approved childcare such as childminders, nannies, after school clubs, nurseries and playschemes that have signed up to the scheme.
Employer-supported childcare and childcare vouchers
You should be aware that you cannot claim both the government childcare scheme and employer-provided childcare vouchers or employer-supported care, as you can only claim one.
If you apply for tax-free childcare, then you should inform your employer within 90 days of making the application.
How do I apply?
If you believe you are eligible and you want to apply for tax-free childcare, then you can fill in an application online at www.gov.uk/apply-for-tax-free-childcare.
Further Actions
You should weigh up the options that are available to you and decide which would be the most tax-efficient option for you.
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Any questions?
If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant
• You can ring us on 0151 380 8080
• You can email us at growth@jondaviesaccountants.co.uk