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Tax-free childcare scheme

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From 24 November, parents of children up to age 6 (born on or after 24 November 2011 and before 1 April 2013) will be able to open a childcare account for the ‘tax-free childcare’ scheme, through which the government can make top-up payments of up to £2,000 per child each year (£4,000 for disabled children). The scheme is being introduced in phases, with all eligible parents able to apply for the scheme by the end of March 2018. Previous admissions to the scheme took effect from:

·        14 July 2017 for children born between 1 April 2013 and 1 September 2013; and

·        21 April 2017 for children born on or after 1 September 2013.

Other changes are being introduced from 7 December, including:

·        extending from 14 to 31 days the window during which a person can apply for a childcare account ahead of starting or returning to work;

·        enabling parents to ignore any loss-making self-employment and rely solely on their employment income in support of eligibility for the scheme;

·        providing for compensatory payments to parents who have been unable to receive tax-free childcare top-up payments for a continuous period of at least 14 days owing to technical failures affecting the online service; and

·        enabling a childcare account holder’s entitlement period to be varied, by up to two months, to align with their partner’s existing declaration period for the ‘30 hours’ free childcare’ scheme.

These changes are made through the:

·        Childcare Payments (Amendment) Regulations, SI 2017/1096;

·        Childcare Payments (Eligibility) (Amendment) Regulations, SI 2017/1101; and

·        Childcare Payments Act 2014 (Commencement No 5) Regulations, SI 2017/1116.

The online childcare service, through which parents apply for the scheme, has been experiencing technical problems since it opened in April, causing HMRC to open up a channel for claiming compensation. The financial secretary to the Treasury acknowledged in a statement on 15 November that ‘applications for tax-free childcare accounts have been lower than expected’.

Issue: 1378
Categories: News