Tax-free childcare is on the rise but over a million parents are still not using the scheme.
According to the latest survey published in December shows 205,000 families used Tax-Free Childcare. This represents an increase of over 90,000 families using the scheme when compared to the same period in 2018. However, this is far lower than the 1.3 million who are eligible.
However, account usage still remains low for children aged 5 and over. Overall numbers are still way below the initial Government forecasts, partially driven by a lack of employer involvement and the limited number of uses but if you’re a parent with young children, the scheme can definitely help lower the cost of Ofsted registered childcare.
Catapillr is the only company in the UK who have designed, developed and launched a salary advance workplace solution, to deal with the issues of childcare. We are the first company to have built a bridge between employers, employees, childcare providers and the Government’s new childcare support scheme called Tax-Free Childcare. HMRC have encouraged employers to help their employees with their Tax-Free childcare accounts but up until we created our platform, there was not an automated and secure way in which to do so.
The scheme works by providing you with an extra 20% on top of whatever you’ve saved into your online account. Primary uses are with childminders, nurseries, and nannies but they must be registered childcare providers and set up with the scheme before you can pay them. There are eligibility criteria attached to the scheme, which we’ve listed out below:
If you require any further information, then check out the Government’s childcare choices website.
You’re in if:
- Both parents work or a sole parent is working
- Both parents earn over £125 per week
- Your children are under 12 or 17 if disabled
You’re out if:
- One parent doesn’t work or is studying
- Either parent earns over £100,000
- If your child does not usually live with you
Tax-free childcare can ONLY be used with a registered childcare provider, such as a nursery or childminder and can be used up until your children are 11 or 17 if they are registered disabled.
How the scheme works.
The scheme works on a per-child basis.
You need to register and set up an online account.
You then pay money into your account each month, after which the Government will give you a 20% top-up, up to a maximum of £500 every 3 months, which equates to £2,000 per year.
You will then be able to pay registered childcare providers directly from your account.
A few more do’s and don’ts.
Tax-free childcare can be used in conjunction with the 15 & 30 free hours scheme.
Tax-free childcare cannot be used in conjunction with Universal credit, Tax credits or childcare vouchers.