Good news for (some) parents: measures to facilitate the access of people with school-aged children to the government’s tax-free childcare system were announced in the budget.
This scheme is intended for working families, including the self-employed, in the UK with children under 12 (under 17 in the event of a disability). Parents open an online account to pay for registered childcare – a childminder, nursery, nanny, after-school club, play program, etc. However, your childminder must be affiliated with the device.
For every Â£ 8 you donate, the government adds an additional Â£ 2 up to Â£ 2,000 per year for each child. That’s up to Â£ 500 every three months. If you have a disabled child, you can receive up to Â£ 4000 per child.
But the adoption was not great – in December, only 205,000 families used the program. In an attempt to increase these numbers, the budget documents announced a “service enhancement that will make duty-free child care compatible with school paying agents.” Essentially, that means integrating the program with online school payment providers like ParentPay, which should increase adoption, says Becky O’Connor, personal finance specialist at insurer Royal London.
ParentPay is already used by around 3 million parents to make online payments for things like school lunches and travel. More than 11,000 schools use it.
To qualify for tax-free childcare, you must each earn a minimum amount – at least Â£ 1,707 in total over the next three months – but less than Â£ 100,000 per year. If you or your partner is on maternity or paternity leave, or unable to work due to a disability or family responsibilities, you may still be eligible.
You can take advantage of tax-free child care services all year round, including during school holidays.
Parents must reconnect every three months and confirm that their contact information is up to date to continue receiving government top-ups.