Martin Lewis’ MoneySavingExpert reminds parents not to miss out on thousands of pounds of tax-free childcare
MARTIN Lewis’ MoneySavingExpert is urging parents not to miss out on thousands of pounds of tax-free childcare.
As part of the tax-free childcare scheme, you can get up to £500 every three months - up to £2,000 a year - for each of your children.
For disabled children, the maximum amount you could get rises to £4,000.
The scheme essentially works like a savings account where for every £8 you save towards childcare costs, the government tops up an extra £2.
So if you put away £8,000 a year for one child, the government will give you £2,000 totally free.
But MoneySavingExpert estimates fewer than one in five of the 1.3 million families eligible for tax-free childcare aren’t taking advantage of the scheme.
What help is available for parents for childcard costs?
CHILDCARE can be a costly business but here is how you can get help:
- 30 hours free childcare - Parents of three and four-year-olds can apply for 30 hours free childcare a week. To qualify you must work at least 16 hours a week at the national living or minimum wage and earn less than £100,000 a year.
- Tax credits - For children under 20, some families can get help with childcare costs.
- Tax-free childcare - Available to working families and the self-employed, for every £8 you put in the government will add an extra £2.
The consumer website also reminded parents that to get the full £2,000 per child, you need to reconfirm your eligibility four times a year to keep your account active.
You should receive a message from the Government around four weeks before your reconfirmation date.
Writing its weekly newsletter today, said: “With schools in England set to reopen next week, parents who use school-based childcare (like breakfast or after-school clubs) can start using the Tax-Free Childcare scheme for these again.
“But to get up to £2,000/yr per child, you need to reconfirm eligibility to claim for any of your chosen childcare.
“Don’t forget if your deadline’s coming up – it only takes 10 seconds.”
Before you apply for tax-free childcare, check if you even need to pay for childcare.
For example, parents of three and four-year-olds can apply for 30 hours free childcare a week.
Am I eligible for tax-free childcare?
Working parents need to earn at least the minimum wage, for the equivalent of 16 hours a week, to be eligible for tax-free childcare.
If you have a partner, they’ll need to expect to earn at least this much too.
Self-employed workers are also eligible, providing they earn this amount too.
If you are self-employed and you don't expect to make enough profit in the next three months, you can use an average of how much you expect to make over the current tax year.
The earnings limit does not apply if you’re self-employed and started your business less than 12 months ago.
Both partners will also have to earn less than £100,000 a year to be eligible.
You and your partner cannot both have accounts for the same child.
You usually have to be working to claim tax-free childcare, but there are some exceptions.
Parents may still be eligible if one of you is working and the other gets Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or Employment and Support Allowance.
Is my child eligible for tax-free childcare?
Your child must be aged 11 or under and usually will need to live with you.
Each child stops being eligible on September 1 after their 11th birthday.
Adopted children are eligible, but foster children are not.
If your child is disabled you may get up to £4,000 a year until they’re 17.
To receive this, your child will need to:
- Get Disability Living Allowance, Personal Independence Payment or Armed Forces Independence Payment
- Be certified as blind or severely sight-impaired
How is the money paid and how do I apply?
Cash is added by the government upfront directly into parents' childcare accounts
You then need to spend this cash on a registered childcare provider.
Nearly 60,000 registered childcare providers are signed up, including nurseries, nannies, childminders and school clubs.
You can apply for the tax-free childcare scheme .
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