Tax free bonus for parents paying childcare

Tax-Free Childcare eligibility further extended

The government has extended the eligibility criteria for support with childcare from 1 November 2020. What do you need to know?

What is Tax-Free Childcare (TFC)?

Well, it isn’t completely tax free, it’s a 20% tax-free bonus to help with childcare costs. Working parents can open a TFC account which is topped up by £2 for every £8 contributed, up to a maximum of £2,000 per child, per year. The money is then used to pay a registered childcare provider. Those earning over £100,000 or less than the national minimum wage for 16 hours per week aren’t eligible for the scheme. Due to the pandemic, lots of people are facing a reduction in their income and may not meet the criteria despite still needing childcare in order to work.

What is the government doing about it?

From 1 November 2020, eligible working parents who receive support through the new Job Support Scheme and extended Self-Employment Income Support Scheme will continue to receive their childcare entitlements, including the 30 hours offer and TFC, even if their income levels fall below the threshold temporarily whilst on these schemes.

What parents need to do 

Don’t delay, HMRC are urging parents to check this website https://www.childcarechoices.gov.uk/ to see which offers work best for them.

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