How to get tax-free childcare support if you’re self-employed
In the UK, the average family spends more than £6,000 a year on nurseries and childminders. That’s a significant chunk of money for any household budget. While the government does provide financial support for parents, assistance has historically been slightly more sketchy for those who are self-employed.
Thankfully, the issue of childcare support for people who run their own business has finally been addressed. A scheme called Tax-Free Childcare was introduced in April 2017. Introduced to replace the long-running Childcare Vouchers scheme, a key difference is that Tax-Free Childcare can offer government assistance for self-employed parents.
What is Tax-Free Childcare?
Tax-Free Childcare is a relatively new scheme created by the government to offer financial support to parents when paying for childcare. Dependent upon eligibility, you could get up to £2000 per year per child. There are limitations – the scheme is only available for children under the age of 11, and earners over £100,000 per year are not eligible. Also, you’ll need to be earning the National Minimum Wage for at least 16 hours a week, which equates to around £120.
So, what about self-employed parents?
Unlike the Childcare Vouchers scheme, Tax-Free Childcare is open to self-employed parents. And it gets even better. If you’re new to the world of self-employment, you won’t need to hit the required £120 lower earning limit in order to be eligible. This ‘start-up’ period lasts for 12 months, after which point you’ll need to hit the earning threshold in order to maintain eligibility.
How does Tax-Free Childcare work?
Tax-Free Childcare is essentially a savings scheme. Parents can set up a Government Gateway account with HMRC, and then pay into it. For every £8 put into savings by you, the government will add £2, up to £2,000 a year per child. This money can then be used to pay for registered childcare.
Where can I find more information?
As with most government support schemes, there are many caveats and intricacies that we don’t have the space to cover here. If you want to find out more about Tax-Free Childcare, then head to the Childcare Choices website. Not only will you be able to apply for the scheme from there, but you’ll also be able to browse all the other childcare support options available.
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