New Childcare Scheme which will also be available for the Self-Employed!

LeeP Accountant’s summary on the new Childcare scheme which for once seems to give a ‘nod’ to those who are self-employed!

A new childcare scheme called tax-free childcare (TFC) will replace the much loved childcare vouchers which was operated by Employers. The new scheme will start to rollout from April 2017.

Self-employed parents will be able to get support with childcare costs in Tax-Free Childcare, unlike the current scheme (Employer-Supported Childcare) which is not available to self-employed parents. Additionally, to support newly self-employed parents, the government is introducing a ‘start-up’ period. During this, self-employed parents won’t have to earn the minimum income level.

 

How the Scheme works:

  1. You’ll be able to open an online account through the Gov.UK website, which you can pay into to cover the cost of childcare with a registered provider.
  2. For every 80p you pay in, the government will top up an extra 20p – This is equivalent of the tax most people pay – 20% – which gives the scheme its name, ‘tax-free’.
  3. The government will top up the account with 20% of childcare costs up to a total of £10,000 – the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children).
  4. The scheme will be available for children up to the age of 12

 

Qualifying Criteria

  • To qualify, parents will have to be in work, and each earning at least £115 a week but not more than £100,000 each per year
  • Any eligible working family can use the Tax-Free Childcare scheme – it doesn’t rely on employers offering it
  • The scheme will be available for parents who are self-employed

 

Unique Features of the scheme

  1. Parents and others can pay money into their childcare account as and when they like which gives you the flexibility to pay in more in some months, and less at other times. This means you can build up a balance in your account to use at times when you need more childcare than usual, for example, over the summer holidays.
  2. It’s also not just the parents who can pay into the account – if grandparents, other family members or employers want to pay in, then they can.
  3. You’ll be able to withdraw money from the account if you want to much like a savings account! (However, if you do, the government retains its 20% top up contribution)

 

If you’d like to learn more about how this might impact your self-employed business or your staff please get in touch with LeeP financial on 01733 699033 or email contact@leepfinancial.co.uk – Accountants in Huntingdon & Peterborough