What is the Tax-Free Childcare scheme?
The Tax-Free Childcare scheme can help to save families up to £2,000 per child on their yearly childcare bills.
For every £8 paid into an online account, families will automatically receive an additional £2 from the government.
It can be put toward childcare costs for:
- school holiday clubs
- breakfast clubs
- after school clubs
- childminders
- nurseries
Are self-employed workers eligible for the Tax-Free Childcare scheme?
Tax-Free Childcare is for anyone in work, whether they’re employed, self-employed or a director.
Who is eligible for Tax-Free Childcare?
If you, or your partner (if you have one) are in work, on sick/annual leave or on shared parental/maternity/paternity/adoption leave and you’re going back to work within 31 days of the date you first applied, then it’s likely you are eligible.
There’s also a chance you could still qualify even if you’re not currently in work, for example, if you or your partner receive incapacity benefit, severe disablement allowance, carer support payment or contribution-based employment and support allowance.
There are a number of factors that will determine whether or not you’re able to take advantage of this scheme:
Your earnings
If you and your partner expect to take home the following over the next three months:
- £2,379 – if you’re aged 21 or over
- £1,788 – if you’re aged 18-20
- £1,331 – if you’re aged under 18, or an apprentice
Most self-employed workers won’t know precisely how much they’ll earn, and so in this case you can use an average of how much you expect to take home over the current tax year.
If you started contracting less than 12 months ago, it’s possible to earn less and still be eligible.
Dividends, pension payments and income from property investment do not count toward this figure.
Your child
If you have an adopted child you will still qualify for the scheme, but it is not available for foster children.
You can only receive Tax-Free Childcare for a child who is 11 years old or under – they stop being eligible on the 1st of September after their 11th birthday.
If your child is disabled (and lives with you) then the qualifying age increases to 16 years old. In this case, they will need to receive the following:
- Disability Living Allowance
- Personal Independence Payment
- Armed Forces Independence Payment
Other factors to consider
You and your partner must also have a National Insurance number and either British/Irish citizenship, a settled or pre-settled status and permission to access public funds.
If you already claim for Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers then you cannot receive Tax-Free Childcare at the same time. It’s worth working out which one is best for you and your situation.
How do I apply for the Tax-Free Childcare scheme?
You will need to set up an online account via the government website to apply for the scheme.
As a contractor, you will need to provide the following information:
- National Insurance number
- Unique Taxpayer Reference (UTR)
- UK birth certificate reference number of the children you’re applying for
- the date you started/are due to start work
Our team of experts are available to answer any queries you may have, so drop us a line on 01442 795 100, email jaime.thorpe@dolanaccountancy.com, or contact us via live chat.
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