Tax-Free Childcare Update

What is Tax-Free Childcare?

Tax-Free Childcare is a new government scheme, which will be available to around two million working households to help with their childcare costs. From early 2017, working parents with children under 12 (under 17 for disabled children) can set up an online childcare account to pay their childcare providers directly. For every £8 parents pay in, the Government will add £2, up to a maximum contribution of £2,000 per child, per year (£4,000 per year for disabled children). To qualify, parents must be in work and each earning at least £115 a week and not more than £100,000 per year. 

What do childcare providers have to do?

Childcare providers have a pivotal role in Tax-Free Childcare - if you don't sign up, parents won't be able to use Tax-Free Childcare to pay you. The government will write to childcare providers during September and October 2016 inviting you to sign-up before the launch to parents in early 2017.

Top five things childcare providers need to know

1. When can I sign-up for Tax-Free Childcare?

You’ll be able to sign-up as soon as you receive your invitation from the government in September and October 2016. Once you sign-up, you’ll appear on our new digital tool, which lets parents search for childcare providers signed up for Tax-Free Childcare. This tool will be available from early 2017.

2. What information do I need to sign-up?
Your letter will include a user ID which you will need to start the online sign-up process. You’ll also need:

  • If you’re running a business: your 10-digit Unique Tax Reference (UTR) number to sign-up for Tax-Free Childcare. This is the number that HM Revenue and Customs (HMRC) gave you when you first told HMRC that you were working for yourself. You can find your UTR on any HMRC communications, for example, your tax return or your payment reminder. If you can’t find your UTR number, HMRC can send this number to your address. For more information call 0300 200 3410.
  • To tell us your bank details.

3. How do parents pay for Tax-Free Childcare?
Parents will be able to send payments directly from their Tax-Free Childcare account to your bank account. Each child will have a Tax-Free Childcare reference number. Parents can share their reference numbers to help you identify payments.

4. When can parents start using Tax-Free Childcare?
Tax-Free Childcare will be rolled out gradually from early 2017, parents with the youngest children able to apply first. Parents will be able to apply for all their children at the same time when their youngest child becomes eligible. All eligible parents will be able to join Tax-Free Childcare by the end of 2017.

5. What happens if the details that my regulator have are not up-to-date?

We will be sending your invitation to the postal address held by your regulator so you may not receive it if your details are out of date. Please 
ensure your regulator has your correct details, including your current email address.


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