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Tax-free Childcare – Updates in April 2018


Who said that there was no such thing as a free lunch?!

You may be aware of the few initiatives that the government have launched over the past year, ostensibly to ease tax burdens on working parents. An initiative to provide 30 hours of “Free Childcare” began back in September 2017.

From April 2018, the focus very much switches to the “Tax-Free Childcare” initiative as the “Childcare Voucher Scheme” will close to new entrants (UPDATE: This change has now been pushed back 6 months. The government have not yet announced an official cut off date for the vouchers).

To recap the structure of the scheme:

  • It is available to parents of children up to the age of 12 (increased to 17 for children with disabilities) – as long as both you and your partner earn more than £120 per week, and neither one of you earns more than £100,000 per year.
  • You will need to set up a Tax Free Childcare account, which the government will top up by £2 for every £8 you pay in (you can pay childcare of up to £10,000 per child per year using this account).
  • This scheme replaces the old childcare voucher scheme (and so you cannot claim both).
  • This can be used in conjunction with the 30 hours of free childcare mentioned above.

The government have set up their own site containing more detail (as well as information on how to apply). If we are your accountant and you would like more information on how this may apply to your own specific circumstances, contact your account manager on 01872 300 232 or email [email protected].

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