After the further announcements in the budget, HMRC has now confirmed further details about the incoming Tax-Free Childcare scheme going live in 2017.
The scheme itself has been in test since October 2016 and testing continues with approximately 1,500 parents having taken part.
It’s now expected that roll out will commence from April with HMRC initially focusing on parents of the youngest children first with a full roll out expected by the end of the year to all parents who qualify.
The scheme allows parents of children up to the age of 12 to claim up to £2,000 per child per year, or £4,000 for disabled children under 17 and can be used towards childcare costs through an Ofsted registered provider. 100,000 letters were sent out to registered UK providers of childcare for them to sign up to the scheme as payment will be made through the electronic accounts set up for the parents and so far more than 20,000 providers have signed up and that number is expected to increase as we get closer to the roll out.
Parents will be required to confirm their eligibility in respect of their child’s details and employment status prior to setting up their digital account which will be through the NS & I and the for every 80p invested by the parents a further 20p will be added by the government (40p for disabled children). The account can have up to a maximum of £500 per quarter in total per child (£2000 per year) and £4000 for disabled children.
It was also re-confirmed that both parents will have to be in work, and each earning at least £115 a week or 16 hours per week and earn no more than £100,000 each per year.
Parents will have an account for each eligible child so a maximum of £10,000 will be held in each but they will be accessed through a single log-in.Parents will be able to select their childcare providers, link them to their child and arrange payments all through the digital account.
Each child will have a unique reference, which will allow the provider to link payments received from the account to the child concerned.
HMRC will also be launching a publicity campaign imminently to explain Tax-Free Childcare to parents.
For more information, go to https://childcare-support.tax.service.gov.uk/
