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Tax-Free Childcare Scheme

  • Personal Tax Advice   •   Thursday 15th February 2018

The government have now introduced a new scheme for Tax-Free childcare which will help eligible working parents with the cost of childcare –  GOV.UK childcare under 9s

The scheme was first introduced with some system issues back in April 2017 however HMRC are aiming to have everything working properly for all eligible parents by 14 February 2018. Eligible parents are able to make their application online via the Childcare Choices site at – – you can apply for all eligible children within one application.

The scheme is to setup under the following guidelines:

  • For every £8 the parent pays, the government provides a £2 top-up, to a maximum of £2,000 per child each year
  • There will be a higher limit of £4,000 for disabled children (giving a total childcare allowance of £10,000, or £20,000 for disabled children.)
  • To be eligible, parents must have a minimum weekly earning of at least £120 per parent. The upper earnings limit is a combined income of £100,000

Compensation may also be available in certain circumstances where a parent:

  • Isn’t able to complete the application for Tax-Free Childcare
  • Isn’t able to access their childcare account
  • Doesn’t get a decision within 20 days as to their eligibility without explanation

For parents who employ the services of a nanny should be able to use the childcare account to pay their PAYE tax and National Insurance. Due to the government’s delay in getting this system working in time may also give grounds for compensation so please be sure to check. If you would like to apply for compensation on any of the above grounds then applications can be made online at – GOV.UK childcare-service-compensation .

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