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For parents with children aged 0 to 11

Tax Free Childcare has been introduced by the government to support working families with the costs of childcare.

Parents who are eligible for this scheme open an online account to pay in money for their childcare costs. For every 80p that a parent pays in, the government will add 20p up to a maximum for childcare costs of £10,000 (the equivalent of £2,000 support per child per year or £4,000 for disabled children). 

Who is eligible to join the Tax Free Childcare scheme?

To be eligible, parents must:

  • earn at least £115 per week but less than £100,000 per year
  • not be in receipt of childcare vouchers, tax credits or Universal Credit
  • have children who are under 12 (or under 17 for disabled children)

How does the Tax Free Childcare scheme compare with the Employer-Supported Childcare scheme?

Some parents may receive support from their employer in the form of childcare vouchers through the Employer Supported Childcare scheme. The Tax Free Childcare scheme differs from this in the following ways:

  • Tax Free Childcare does not rely on employers offering it. Any working family can use it, providing that they meet the eligibility requirements.
  • Employer Supported Childcare has a maximum amount that can be claimed, regardless of the number of children that a parents pays childcare costs for but Tax Free Childcare provides financial support per child.  
  • Tax Free Childcare is also available for the self-employed, compared to Employer-Supported Childcare that can only be accessed if provided by an employer.

More information can be found on the gov.uk website.

Employer Childcare Voucher scheme

The existing Employer Supported Childcare scheme closed to new entrants from 4 October 2018. However any parent who is using it at that time will be able to carry on doing so if they wish as long as their employer continues to offer it. 

Parents receive help with childcare costs in the form of a childcare voucher. This would normally be a salary sacrifice scheme i.e. a parent is taking the childcare voucher instead of some of their salary. This gives a saving in terms of tax and national insurance contributions for the parent. The maximum value they can take in the form of a salary sacrifice is £55 per week (£243/month) per parent, though this depends on when they joined the scheme and how much they earn. The maximum amount that can be claimed is the same, irrespective of how many children they pay childcare for. Childcare vouchers can affect the amount of tax credits they may be entitled to.

To see if you would be better off claiming childcare vouchers or tax credits, use the HMRC better off calculator.

You should ask your personnel department, line manager or employer if any childcare help is offered and how it is allocated.

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Article utilities:  Bookmark and Share Print Print this page Last updated: 12 Feb 2019 at 14:24