The government has begun providing details of the new tax-free childcare scheme, to be introduced in 2017, which supersedes the current employer-supported childcare scheme and which will be available to an estimated two million families, including those where a parent is self-employed.
The Treasury, along with HMRC and the Department for Education, has published a new guide, ‘Tax-Free Childcare: 10 things parents should know’.
This states that the scheme will be launched from early 2017 and will be rolled out gradually to families, with parents of the youngest children able to apply first.
It is available for children up to the age of 12, and will also be available for children with disabilities up to the age of 17, as their childcare costs can stay high throughout their teenage years.
All eligible parents will be able to join the scheme by the end of 2017. They will be able to open an online account, which they can pay into to cover the cost of childcare with a registered provider.
This will be done through the government website, gov.uk.
For every 80p paid in, 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).
To qualify, parents will have to be in work, and each earning around £115 a week and not more than £100,000 each per year.
Unlike the current scheme employer-supported childcare, the new scheme does not rely on employers making the option available, which the government says means double the number of families will be able to benefit.
In addition, self-employed parents will be able to get support with childcare costs, unlike the current scheme. To support newly self-employed parents, there will be a ‘start-up’ period during which self-employed parents will not have to earn the minimum income level.
The scheme will also be available to parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave.
Parents and others, including family members and employers, can pay money into the childcare account as and when they like, building up a balance for periods where more childcare is needed such as over the summer holidays.
The guidance says there will be a light-touch process for parents using the scheme who will need re-confirm their circumstances every three months via the online system, and there will be a simple log-in service where parents can view accounts for all of their children at once.
If family circumstances change, or parents no longer want to pay into the account, then they will be able to withdraw the money they have built up. If they do so, the government will withdraw its corresponding contribution.
Alongside the new scheme, the current employer-supported childcare scheme will continue and there is no obligation for parents to switch to tax-free childcare. The current scheme will remain open to new entrants until April 2018, and parents already registered by this date will be able to continue using it for as long as their employer offers it.