Date posted: 11th Jul 2022
If you have children under 12 who attend a nursery, after school club, play scheme, childminder or you are considering sending them to a summer camp, you should think about setting up a tax-free childcare account.
The government adds 25% to the amounts that you save in the account, contributing up to £2,000 for each child each year (a higher amount applies for disabled children).
For example, if you save £8,000, this is topped up to £10,000 once the government add their £2,000 contribution.
The account is then used to pay approved childcare providers. It is worth noting that it doesn’t just need to be the child’s parents paying into the account. Uncles, aunts, grandparents and others can also make payments. The government have noticed that many families who are eligible for this scheme are yet to set up their accounts.
Various factors affect eligibility but those with annual net income in excess of £100,000 are notably excluded.
The tax-free childcare account scheme will gradually replace childcare vouchers which many employers continue to provide to employees.
Childcare vouchers are free from tax and national insurance (within specified limits) and can be used to pay for childcare until the child is 16. Childcare voucher schemes can no longer be set up but employees already eligible can continue to benefit.
If you have any queries, please give us a call.
