Help with the cost of childcare
Tax-Free Childcare Scheme
The government’s Tax-Free Childcare scheme is designed so that for every 80p a parent/carer puts into their Tax-Free Childcare account, the government will top up by 20p. This essentially means that parents/carers can get their basic rate tax back on their childcare invoices.
Eligible parents/carers can claim up to £2000 per child per year under this scheme and it is available to all workers, including those who are self-employed.
To qualify for the government’s Tax-Free Childcare a parent/carer (and partner if there is one) need to be working and each person must earn a minimum of £140 a week and less than £100,000 a year.
If a parent/carer is eligible for this scheme you will need to create an online childcare account via the government’s Tax-Free Childcare site www.gov.uk/tax-free-childcare. It should take approximately 20 minutes to set up and you will also need your National Insurance number.
You will be able to pay money into your Tax-Free Childcare account by setting up a standing order or by making a payment from your bank account (using your debit card). The government should then top up your account with the extra funds the same day. For example, if you put in £80, it should be boosted by £20 to £100 within hours.
The fastest way for money to arrive in your account is via bank transfer and once the funds are in your Tax-Free Childcare account you can release the funds to settle your nursery invoice.
We have accounts set up under this scheme for all our nurseries and the appropriate account for your child’s nursery can be found by searching under the relevant post code or OFSTED registration number for the setting.
If a payment is made from your Tax-Free Childcare account before 2.30pm then the funds should arrive in our bank account the same day. After 2.30pm, or on a weekend/bank holiday then the money will arrive in our account on the next working day. However, in some cases it can take up to 3 working days to reach our account so please plan your payments to avoid missing invoice payment dates and possibly incurring late payment fees.
You can find out more about the government’s Tax-Free Childcare scheme by visiting their website www.gov.uk/tax-free-childcare
Childcare Voucher Scheme
Childcare vouchers allow parents/carers to pay for their childcare from their pre-tax salary but please be aware that the voucher scheme closed to new applicants in October 2018. Parents/carers can still use this scheme if you signed up before October 2018, are still with the same employer and they still offer the voucher scheme. If not, Tax-Free Childcare might be a good alternative and at the Nursery Family we also accept payments under this scheme.
Here at the Nursery Family, we accept childcare vouchers from all of the major providers, but we are always happy to open an account with a childcare voucher provider if necessary.
The childcare voucher scheme works by “salary sacrifice”, directly from your salary, which if a parent/carer is on the basic-rate tax band approximately means the following:
“A parent/carer gives up £1000 of salary to the scheme but after tax and National Insurance would get around £700 in their pocket. With the childcare voucher salary scheme, you get £1000 of vouchers so you are £300 better off” For more accurate figures, please visit the childcare voucher calculators on your voucher provider’s website.
Basic rate taxpayers could buy £55 worth of childcare vouchers a week (approximately £243 per month). This is per parent so two working parents can get £110 of vouchers a week (approximately £486 per month). The number of children that you have does not affect this calculation, so the limits are the same and do not change if you have more than 1 child.
Parents/carers using the childcare voucher scheme will receive electronic childcare vouchers from their employer, which are credited to their online account. From this online voucher account parents/carers can request payments to any of our nurseries by using our unique account number. This account number can be found by searching under the post code for the setting or using the registered OFSTED number for the appropriate nursery. Payment is then made directly into our bank account by BACS payment but please note that these payments can take up to 3 working days to reach our account so please plan your payments to avoid missing invoice payment dates and possibly incurring late payment fees.
Please note that childcare vouchers are usually non-refundable as they are a non-cash benefit. HMRC advises that they should only be refunded in exceptional circumstances and at the discretion of the employer, through their company payroll, so that the appropriate tax and National Insurance deductions can be made.
For further information regarding your employer’s childcare voucher scheme please visit the appropriate childcare voucher website.