Little Beehive Nursery

Are you missing out on claiming upto £2000 towards your nursery fees? - Tax Free Childcare

11th March 2019

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Any help families can get towards the cost of their childcare is welcome but how many families are missing out on claiming upto £2000, from the government, towards their childcare fees?

It can be very easy to become bamboozled with all the different schemes available, hopefully this short blog will help parents understand what they are entitled to and how to apply for it.

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Matthew Martin

Business Manager

Are you missing out on claiming up to £2000 towards your nursery fees?

March 2019

Any help families can get towards the cost of their childcare is welcome but how many families are missing out on claiming up to £2000, from the government, towards their childcare fees?

It can be very easy to become bamboozled with all the different schemes available; hopefully, this short blog will help parents understand what they are entitled to and how to apply for it.

So many schemes!!

Childcare Tax Credits, Vouchers Scheme or Tax-Free Childcare – which one should I be using?

The new tax-free childcare scheme is replacing childcare vouchers; however, although the voucher scheme has been closed to new signups, you can still use them as long as your employer provides them.

The first thing to check…

Are you eligible for childcare tax credits? If you work 16hrs or more a week (couples must both work) and have a sub £46,000 family income, you could be entitled you to childcare tax credits typically worth £3,000 per year.  There is no guarantee but it would be worth checking, and it may be a better option than the tax-free childcare scheme which is discussed below.

The new tax-free childcare scheme was introduced in April 17, and you could get up to £2000 per child to cover annual childcare costs of up to £10,000

How does it work and who is eligible?

Parents need to sign up to an online childcare account via https://www.childcarechoices.gov.uk.

Once this account is set up you will be able to transfer money from your bank as you would any other “savings account”.  Only one parent can open an account, but both will be able to use it.  The government will top up the account with the extra cash the same day you deposit money into this account, e.g. If you deposit £80 your account will be boosted to £100 within a few hours.  Others such as grandparents, family or friends can also put cash into this account.

You can pay in more than you require some months to help build up a pot of cash, e.g. to help pay for extra childcare costs in the school holidays but be aware you can only get a maximum top-up of £500 every 3 months.

Every  3 months it is necessary to “reconfirm” your eligibility – you will get a reminder from the government

Here is an example of how it would work:

If your nursery fees are £500 per month you would pay £400 into your “childcare account” and the government would pay £100 into the same account.  You would then pay the nursery from that account.  The maximum the government will pay a year is £2000.

Here are the main points:

·         The tax-free childcare scheme is available to all eligible workers including self-employed.

·         If you have a partner you both need to be in work to qualify

·         Single parents qualify

·         You can apply to the scheme for childcare costs for children upto and including the age of 11 years

·         If your child is registered disabled you can claim upto £4000

·         You (and your partner if you have on) need to be earning a minimum of the equivalent of 16hours per week at the national minimum wage (currently £125.28 per week if you are over 25years old)

·         You can work less than 16hours as long as your income is more than the £125 per week.

·         If you are self-employed your 3 monthly average must meet the £125.28 per week minimum to be eligible however if you have been self-employed for less than 12 months this minimum income does not apply

·         If you're on paid and unpaid statutory maternity, paternity and adoption leave, it still counts as being in work, so you can still benefit from the scheme as long as you'll be back to work within 31 days. You can't apply for the child that you're on parental leave for, but you can apply for other children you have, so you can still use the scheme for older siblings.

If I currently use childcare vouchers should I change to the new tax-free scheme?

It may be that you might be better off claiming tax-free childcare instead of vouchers however it is very important that you check how much you get with each scheme before switching as you can’t go back to vouchers once you have moved.

An example of tax-free childcare winning over vouchers would be anyone who is self-employed or a parent with high childcare costs or more than one child whereas vouchers do not require both parents to be working to be eligible.

What about illness, disability or any caring responsibilities I may have?

Although the rules say both parents need to be in work, you'll still be eligible for a childcare account if you or your partner is in work and the other is not able to and receives any of the following benefits:

·         Incapacity benefit or long-term incapacity benefit

·         Severe disablement allowance

·         Carer's allowance

·         Contribution-based employment and support allowance

·         National insurance credits (because of incapacity or limited capability for work)




The purpose of this blog is to give parents\carers are overview of what tax-free childcare support is available at the time of the article however this information does not constitute financial advice, always do your own research to ensure its right for your specific circumstances. We are not responsible for the content of any websites this article links to

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