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What is Tax-Free Childcare? - Information for practitioners

Tax-Free Childcare is a new Government scheme to help working families with their childcare costs.

Parents will be able to open online childcare accounts to pay their registered childcare providers directly. For every £8 parents pay in to these accounts, the Government will add £2, and the total amount in the account can only be spent on childcare. Parents can receive up to £2,000 in Government support per child, per year, or £4,000 for disabled children. You’ll need to have signed up for Tax-Free Childcare to be able to receive payments from any of your customers via the scheme.


The system will be quick and simple for parents and childcare professionals to apply for and use.


For childcare professionals:

You can sign up for Tax-Free Childcare, allowing parents to pay directly to your bank account. Parents in Tax-Free Childcare should find it works in the same way and at the same speed as making a payment via an online bank account.

Each child will have a unique reference number, so you’ll be able to identify which payments cover which children.


How does it work?

For parents:

Parents could get a Government contribution of up to £2,000 per child, per year, or £4,000 for disabled children, to go towards their childcare costs.


Parents will have an online account – just like a bank account – which they can use to pay childcare professionals. They’ll be able to track how much they’ve paid in and how much they’ve spent for each child. The top up will be added into the account on the same day, and the total amount will be available to pay for childcare.


Who’s eligible?

Parents could be eligible for Tax-Free Childcare if they:

- Earn at least £115 per week but less than £100,000 per year

- Don’t receive childcare vouchers, tax credits or Universal Credit

- Have children who are under 12, or under 17 for disabled children

When will it be available?

Tax-Free Childcare will be available from early 2017. It will be rolled out gradually, with parents of the youngest children able to apply first. Parents will be able to apply for all their children at the same time, as soon as their youngest child becomes eligible. All parents will be eligible by the end of 2017


Next steps


Providers wishing to register so that they can accept payment of tax free childcare from parents should register by visiting the link on the right hand side of this page.  Additional informaiton about the top things you need to know about Tax-Free Childcare here:


Find lots more detailed information on the Childcare Providers' page.

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