The Government’s Tax-Free Childcare Accounts offer a 25% subsidy towards childcare costs. These accounts can be used to cover nursery fees, breakfast clubs, after-school clubs, and registered childminders.

The scheme works by topping up savings of up to £8,000 per child by 25%, potentially providing an extra £2,000 per year from the Government to spend on eligible childcare. Generally, the scheme applies to children under 12. However, for disabled children, the age limit extends to 16, and the amount that can be saved increases to £16,000 annually, with the Government adding a further 25%, potentially bringing the total to £20,000.

Unlike childcare vouchers, which are still offered by some employers, Tax-Free Childcare Accounts are available to both employees and the self-employed. To qualify, parents generally need to be working and earning at least the National Minimum Wage or National Living Wage for a minimum of 16 hours per week on average. However, parents are ineligible if either parent’s adjusted net income exceeds £100,000 per year.

It’s important to note that if an employer provides Childcare Vouchers, parents cannot also set up a Tax-Free Childcare Account. Please reach out to us for guidance on whether it might be beneficial to leave your employer’s Childcare Voucher Scheme, particularly considering that the voucher scheme applies to children up to age 16, compared to age 12 for the Tax-Free Childcare Account.