Budget 2020 – Tax free childcare help for 500,000 to pay for after-school clubs announced by the Chancellor
THOUSANDS of parents who claim tax-free childcare will get better access to funds to help pay for before and after school care.
The government announced it will be updating its tax-free childcare scheme so that it works with online cashless payment systems.
It means parents who use digital platforms to pay for school-related costs will now be able to link this to their government tax-free childcare account.
The Treasury announced the move in the Budget 2020 today, the first for new Chancellor Rishi Sunak, and said it’ll benefit the parents of 500,000 school children.
Tax-free childcare is available to 1.5million families where the parents earn at least the national minimum wage or living wage for 16 hours a week.
If you're eligible, you get £2 for every £8 you pay towards childcare, with a maximum top-up of £2,000 per child a year.
How to apply for tax-free childcare
YOU can use the Government's childcare calculator to work out what help you might be entitled to.
You can find this tool on .
You’ll need your details (and your partner’s, if you have one), including:
- National Insurance number
- Unique Taxpayer Reference (UTR), if you’re self-employed
If it looks like you will be eligible, you can .
You’ll need your details (and your partner’s, if you have one), including your national insurance number and unique taxpayer reference (UTR), if you’re self-employed
It takes 20 minutes to apply and you'll find out if you qualify within seven days.
Be aware that you have to apply for both tax-free childcare and 30 hours of free childcare at the same time.
If you're eligible you'll get a childcare account. You can use this to pay your childcare provider.
To continue getting the benefit, you must confirm your details are up to date every three months.
It works by parents topping up their accounts with cash, with the bonus being added by the government usually on the same day.
Under previous rules, accounts could only be used to pay registered childcare providers - but the update will mean the funds can be moved into a cashless account that's used to pay for childcare costs.
The Treasury said digital platforms will need to be signed up to the tax-free childcare scheme.
Parents should then see the payment provider as an option for funds to be moved into when they log into their tax-free childcare account.
Becky O’Connor, personal finance specialist for Royal London, said: "One of the difficulties with uptake of tax-free childcare has been a lack of awareness among parents of school-age children, or them finding it too difficult to use.
"By bringing tax-free childcare into payment systems parents already use, this new system should make it much easier and quicker for parents to take advantage of Tax-Free Childcare.
"Once it is in place, I’d expect to see an increase in the number of parents using this valuable source of help."
Tax-free childcare is available to children under the age of 12, or 17 if your child has a disability.
We've asked the Treasury when the update will happen and we'll update this article when we know more.
Over a million families are missing out on tax-free childcare - is your family one of them?
Here we explain what tax-free childcare is, how to apply, and who is eligible.
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