The Government's flagship new Tax-Free Childcare scheme will open to parents of kids aged four and five next week - but the rollout for those with children over six has been delayed by up to three months.
The scheme, which gives eligible parents or guardians up to £2,000 free per child towards childcare costs each year, will open on Friday 24 November to those with children aged four or five, or who have their sixth birthday on that day.
It was supposed to have been rolled out to those with children under 12 by the end of the year, but HM Revenue & Customs (HMRC) has now announced it won't be completed until March 2018 after huge problems with the website set up to administer the scheme.
For full help on how the scheme works see our Tax-Free Childcare guide.
What is Tax-Free Childcare?
Under the Tax-Free Childcare scheme, parents and carers in the UK can open a special account to save for childcare costs.
For every 80p you deposit, the state adds 20p. In total the state can add up to £2,000 per child a year (or up to £4,000 if your child has a disability) - so including what you deposit, you can use the scheme to pay for up to £10,000 of childcare per child each year.
It's worth noting you can only get a maximum top-up of £500 every three months, but the state's extra 20% is added at the point you put money into your Tax-Free Childcare account, not when you spend it.
So if you have seasonal costs, put money into the account throughout the year, accruing the full top-up as you go, then spend it only when you need to – thus avoiding the £500 per three-month limit.
Which children are eligible for the scheme?
Currently the Tax-Free Childcare scheme is available to those whose children were under four on 31 August this year.
From next Friday 24 November, it will open up to anyone whose child is under four or five-years-old, or turns six on that day.
- You and your partner must both be in work in the UK (those who are self-employed now also qualify).
- You must be 16 or over. If you're over 21 you must earn on average at least £120 a week, unless you're in your first year of self-employment.
- You must earn less than £100,000 a year each.
- You can't get other support with your childcare, including from a childcare voucher or salary sacrifice scheme.
Originally the scheme was supposed to be available to all those with children under 12 by the end of the year, but HMRC has now said the roll-out won't be complete until the end of March next year. If you're not yet eligible, you can sign up for email alerts from gov.uk to be told when you can apply.
How do I apply?
You need to sign up for an account on the Childcare Choices website.
Parents of children under four can do this now, but those whose child is four or five-years-old, or turns six on 24 November, will need to wait until next Friday.
To sign up you'll need:
- your National Insurance number
- if you're self-employed, your Unique Taxpayer Reference
- the date you started, or are due to start work
- details of any other Government support you get
What does HMRC say?
A spokesperson said: "More than 275,000 parents have an open childcare account. Of these, more than 216,000 parents received an eligibility code for 30 hours' free childcare for September.
"However, while the majority of parents used the childcare service without significant problems, we recognise that over the summer some parents didn’t receive the intended level of service when using the website. We have now made significant improvements.
"Over the coming months, we will gradually open the childcare service to parents of older children, while continuing to make further improvements to the system. This means we can manage the volume of applications going through the service, so parents continue to receive a better experience and prompt eligibility responses when they apply – almost all parents receive a response within five working days, and most get their decision instantly.
"All eligible parents will be able to apply by the end of March 2018."