Tax free childcare: What you need to know
Find out how you can claim tax free childcare
Childcare costs can really add so knowing how you can save on them is a must. We’ve put together this handy guide to help you understand how the government’s tax free childcare option can help you.
How much can you save on the tax free childcare scheme?
You can save up to £2,000 per child per year to help you cover annual childcare costs of up to £10,000.
Up to £10,000 a year in childcare costs is the total you'll be able to save from the scheme for each of your children – so this could potentially be an extra £2,000 per child (and up to £4,000 a year if your child is registered disabled).
To break this down in monthly terms, if your childcare bill is £500 a month... you'd pay £400 a month with the remaining £100 of the bill picked up by the Government; across the year, this would cut your £6,000 annual costs to £4,800.
How does it work?
The tax free childcare scheme works so that for every 80p you put in, the government will add 20p – so this essentially aims to give you basic-rate tax back on what you pay, hence the scheme's name.
What if my childcare bill is over £10,000 a year?
Once your childcare bill exceeds the Government maximum of £10,000 a year, there's no more financial support. For example, if your childcare bill for one child is £1,000/month, you'd pay £800 and have £200 paid for – after 10 months, once the £2,000 maximum support has been reached, you'll be responsible for paying the whole of the following 2 months costs without assistance from the scheme.
How do I apply?
You need to set up a childcare account at www.gov.uk. It takes about 20 minutes to apply and once approved you can use this account to pay your childcare provider. All qualifying payments you make will get topped up by 20p for every 80p paid in. These ‘top-ups’ are paid by the government every 3 months and per child.
Please note: You cannot register for an account more than 31 days before returning to work from maternity leave.