Do you know about the new Tax-free childcare scheme?

In the following months, all childcare settings catering for children up to the age of 12 will be encouraged to sign their settings up to the new government tax-free childcare scheme. This is a new scheme that the government hopes to begin using early in 2017 and will completely replace the current childcare voucher scheme by the end of 2018.

The Benefits of the new tax-free scheme

The new tax-free scheme will now be controlled by parents rather than their employers and will reach out to more parents because of this. Parents such as those who are self-employed or those working for a company who don’t offer the childcare voucher scheme will now be able to benefit by creating an online account and connecting with the setting their child attends.

The new scheme pays an extra 20p per every 80p a parent pays towards childcare costs; this works out to be 20% which is what the average parents pay in tax. There are some minimum and maximum earning requirements to those who can claim under the new tax-free scheme.

For parents to be able to use the scheme the early years setting their child, attends must be registered with Ofsted or an equivalent authoritative board, and they must also be registered with the new government scheme. All settings will receive an invitation to join so must act quickly on this once they receive a letter to ensure the scheme is rolled out as soon as possible. Without settings signing up to the government tools parents will be unable to link their accounts to the setting and won’t be able to pay for their childcare through this scheme.

Still, some concerns remain

Although the new tax-free childcare scheme is reaching out to more parents the before there are fears amongst some that the new scheme does little to support parents who are facing ever-rising childcare fees and little is being done to support those parents who need financial help with childcare the most.