Childcare Costs

What Is Tax Free Childcare and How Does It Work?

Here at Shine, we want to make childcare as affordable as possible.

You can see how much our services cost on each individual nursery page – which can be found below:

Little Angels Huddersfield
Newbank (Oldham)
Tiny Tree (Leeds)
Tiny Tree (Halifax)

This piece is about how you can use financing offered by the government to lower the cost of childcare even further.

There are a few different options depending on your circumstances. In another post we’re going to look at how you can get 15-30 hours of funded childcare every week.

Here, however, we’re going to talk about tax free childcare.

What Is Tax Free Childcare?

Tax free childcare is a scheme that involves the government sending you a sum of money every month to pay for childcare.

You will receive £2 for every £8 you spend, up to a maximum of £500 every three months – which is £2,000 a year.

This money can only be used for approved childcare.

Obviously this wont cover the entire cost if you enroll your child full-time, but it will make a difference.

And it can be used alongside other benefits, such as funded 30 hour childcare, as long as you are eligible for both.

It’s worth noting that this information is based on you having a single child. If you have multiple children, then you can get £500 every three months for each.

Tax Free Childcare Eligibility

Not everybody is eligible for tax free childcare.

A list of requirements are found below. Please note, if you are not eligible for tax free childcare, it doesn’t mean you are ineligible for other forms of financial assistance.

  • You and your partner (if you have one) need to be employed, or on parental/sick leave
  • You are both earning the national minimum wage and working at least 16 hours per week

However, you can apply if you are out of work, but will be starting/returning to a job within the next 31 days.

Your child must be younger than 11 years old. They become ineligible on September 1st after their 11th birthday.

If your child is adopted, they are still eligible. Unfortunately foster children are not.

Other things that may make your child ineligible include:

  • Your child not living with you
  • Either you or your partner have an annual taxable income of over £100,000
  • You are from outside the EEA

You will also be ineligible if you are claiming any of the below:

  • Working Tax Credit
  • Child Tax Credit
  • Universal Credit
  • Childcare Vouchers

Apply Today

As mentioned, for many this won’t cover the entire cost of childcare. But it can make a big different to lots of parents.

You’d be wise to check if you’re eligible, and find out what you’re entitled to.

You can apply for tax free childcare on the official website.

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