There are currently two ways of saving tax when it comes to childcare fees; the childcare vouchers scheme is being phased out and the current plan is to close it to new entrants from September 2018.
The best scheme for you depends on your circumstances (e.g. are both parents working, does the child get DLA, how much are the parents earning and how many children are there?)
So you need to check into which one will be the best for you.
· These are administered by the employer so check that your employer still offers these · Not available to self-employed parents · Capped at a maximum per parent, so £243 a month for a basic rate tax payer or £124 a month if you pay higher rate tax · You can’t double up per parent if you have two children in childcare · Tax saving at 20% of £243 x 1 parents is £583.20 which would be £1166.40 for 2 parents · Only the parent or parents that work/s can claim it · You can start saving childcare vouchers from when your child is born if you are not being paid maternity pay (e.g. usually fathers) · If only one parent works they can use childcare vouchers Apply through your employer, usually the payroll or benefits administrator.
Tax Free Childcare
· This is an online account administered by the government regardless of employer · Self-employed parents are eligible · This is capped at a maximum of £8,000 parents contribution pa which becomes £10,000 childcare fees when the governments 20% or £2,000 is added in. That’s per year and per child. · You are not eligible if either parent earns over £100,000 pa · Both parents need to be working and each earning over the NMW x 16 hrs/wk. (NMW is currently £7.83ph as of April 2018) · If your child gets DLA the allowance doubles to £4,000 pa · You cannot start this, contribute and ‘bank’ savings until your child starts at nursery · To apply online allow at least 20 mins and have your NI number or UTR if you are self-employed · The website still has lots of teething problems but is improving and there is a helpline. Apply directly via: https://www.gov.uk/help-with-childcare-costs/tax-free-childcare
Thank you for reading my blog.
With our pre-schoolers heading off to school in September, we have child spaces in both our Landbeach and Wilburton settings, so why not come and have a look around. Visit our Beach Babies Facebook page for more information? Did you know we are on Instagram too? Check us out @beachbabiesnursery