A Government scheme set up by HM Revenue & Customs (HMRC) is advising parents to apply for the Tax-Free Childcare scheme, which provides contributions on savings used to cover childcare costs.
Research has revealed that more than a million families are failing to make use of the Tax-Free Childcare scheme.
The Tax-Free Childcare scheme is set to replace the already defunct Childcare Vouchers scheme. It is open to both self-employed and employed parents, giving more than a million families the chance for financial help.
The scheme ensures that for every 80p a family pays in to the online childcare account, HMRC adds an extra 20p, which is equal to the basic tax rate – meaning that some parents could get up £2,000 per year, per child towards the cost of childcare.
In order to be eligible for the scheme both parents have to be working. However, if one parent earns more than £100,000 per year or if parents don’t live in the same residence as their child, they will be unable to use the scheme.
Parents who receive Working Tax Credit, Child Tax Credit or Universal Credit are also not eligible to take part in the Tax-Free Childcare scheme.
Link: Tax-Free Childcare