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Tax Free Childcare
Funded places can also be used in conjunction with the tax free childcare scheme, which could save parents more money if they are eligible. It can also be used by those families who pay privately for childcare, if they are eligible.
Just to clarify, tax free childcare is the government's scheme whereby they match £2 to every £8 a family spends on childcare, with an annual cap of £2000 and £4000 if a child is disabled. It's a great saving for parents and an incentive for them to choose a setting that offers it.
Childminders need to sign up the scheme to offer it to their families and it's pretty straightforward. The way it works is both the childminder and parents have accounts that are linked to their individual bank accounts. Parents put in their portion of the childcare fee, which is automatically topped up by 20% and then it's all sent to the childcare provider.
For example, the monthly childcare bill is £100, so parents put in £80, it’s topped up by £20 and the childcare provider receives the £100 as expected!
Please bear in mind that it can take a few days for the funds to be processed and parents need to set a date for it to be sent. So childcare providers need to allow extra time when sending out invoices and make it clear that parents need to send their portion earlier so that it is cleared before payment deadline.
To learn more about the tax free childcare scheme, please have a nosey at the government's Best Start in Life website, which was formally known as Childcare Choices.
To sign up to offer tax free childcare, please follow this link for more information and to apply:
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