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Tax-free childcare faces more delays

By David Owens

Hawsons Chartered Accountants

THE government have announced a delay to the roll out of Tax-Free Childcare which was expected to be fully implemented by the end of 2017. From 24 November 2017 the service is available to parents whose youngest child is under six or who has their sixth birthday on that day. Parents can apply online through the childcare service which can be accessed via the Childcare Choices website.

In April 2017, HMRC started rolling out the childcare service via a single website through which parents can apply for both 30 hours free childcare and tax-free childcare. The roll out started with parents of the youngest children first. HMRC acknowledge that over the summer some parents didn’t receive the intended level of service when using the website and that they have subsequently made significant improvements. For those parents who have had difficulties in accessing the service, compensation may be available.

Over the coming months, HMRC will gradually open the childcare service to parents of older children, whilst continuing to make further improvements to the system. HMRC hope this strategy will result in prompt eligibility responses when parents apply, with ‘almost all parents receiving a response within five working days, and most getting their decision instantly’.

All eligible parents will be able to apply by the end of March 2018. Parents will then be able to apply for all their children at the same time, when their youngest child becomes eligible.

Tax-Free Childcare is the new government scheme to help working parents, both employed and self-employed, with the cost of childcare. For every £8 a parent pays in, the government will pay in an extra £2. Parents can receive up to £2,000 per child, per year, towards their childcare costs making a total amount of £10,000. Higher limits of £4,000 and £20,000 apply for disabled children.

To qualify for Tax-Free Childcare, parents and partners in the household must generally meet a minimum income level of, on average, £120 a week and each earn less than £100,000 a year.

The scheme will eventually be available for children up to the age of 12, or 17 for children with disabilities. Those eligible will be able to apply for all their children at the same time.

Employer Supported Childcare, usually by way of childcare vouchers, will remain open to new entrants until April 2018 to support the transition between the schemes and the old scheme will continue to be available for current members if they wish to remain in it or alternatively they can switch to the new scheme. It is not possible to benefit from both Employer Supported Childcare and Tax-Free Childcare at the same time.

If you would like assistance or clarification of matters arising under the scheme, contact David Owens at Hawsons Chartered Accountants on 01604 645600 or at

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