Tax Free Childcare Scheme – now delayed until 2017.

Self-employed parents who’ve been waiting for the Government’s new Tax-Free Childcare scheme to launch this autumn will now have to wait till 2017, following a recent Supreme Court judgment.  This is a blow for the self-employed or for people whose employers do not run a child care voucher scheme.

Under the Government’s new Tax-Free Childcare scheme, which will now launch in early 2017, eligible families will get 20% of their annual childcare costs paid for by the Government.

The way it works is that for every 80p you pay into a newly-created Childcare Account, the Government will contribute 20p. Both parents need to be working in order to qualify.

What is it?

The Tax-Free Childcare scheme is a money-back scheme whereby working parents can get 20% of the cost of their annual childcare costs, up to £2,000 per child per year.

For every 80p you or someone else pays in, the government will top up an extra 20p. This is equivalent of the tax most people pay – 20% – which gives the scheme its name, ‘tax-free’.

How will the scheme work?

You will be able to open an on line account, which you or others can pay into to cover the cost of childcare with a registered provider. This will be done through the website.  The government will then top up that account with 20% of childcare costs up to a total of £10,000 – the equivalent of up to £2000 support per child per year.

The scheme aims to be flexible and you can pay into your account as and when you want to. This means you can build up a balance in your account to use at times when you need more childcare than usual, for example, over the summer holidays.

It’s also not just the parents who can pay into the account – if grandparents, other family members or employers want to pay in, then they can.

Who is eligible?

To qualify, parents will have to be in work and earning just over an average of £50 per week and not more than £150,000 per year. The scheme will be available for children up to the age of 12 or for children with disabilities up to the age of 17.

What if I am newly self-employed and not yet earning an average of £50 per week?

To support newly self-employed parents, the government is introducing a ‘start-up’ period.  During this, self-employed parents won’t have to earn the minimum income level, £50 a week.

When will the scheme be introduced?

The scheme is now expected to launch in early 2017.

What happens if I am currently receiving employer supported childcare vouchers?

You do not have to switch to Tax-Free Childcare if you do not wish to. Employer-Supported Childcare will continue to run. Parents won’t be able to register for Employer-Supported Childcare after Tax-Free Childcare is introduced, but those already registered by this date will be able to continue using it for as long as their employer offers it.

The following links provide further information –

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