A low take up of the Tax-Free Childcare (TFC) scheme has been linked to a ‘poor understanding of the initiative’ according to research commissioned by HMRC. The research also indicated that 1.3 million UK families are eligible for the TFC scheme.

Under the scheme you can get up to £500 every 3 months (£2,000 a year) for each of your children to help with the costs of childcare. Your child must be 11 or under and usually live with you. They stop being eligible on 1 September after their 11th birthday. Adopted children are eligible, but foster children are not.

How do you qualify?

To qualify for TFC all parents in the household must generally meet a minimum income level. This is based on working 16 hours a week (on average £131 a week) and each earn less than £100,000 a year and not already be receiving support through Tax Credits or Universal Credit.

What you can use your free childcare for

You can use it to pay for approved childcare, for example:

  • childminders, nurseries and nannies
  • after school clubs and play schemes
  • home care agencies

Your provider must be signed up to the scheme before you can pay them and benefit from the TFC scheme.

It is important to note you cannot get TFC at the same time as claiming Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers. Which scheme you’re better off with depends on your situation. Click here to check whether you would be better off.

If you have any questions about the Tax-Free Childcare Scheme give us a call on 01332 292022 or drop us an e-mail.