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Tax-Free Childcare was introduced in 2017 to help working parents and carers with the cost of childcare, including nannies. Providing you meet the criteria (see below) and the nanny is registered with Ofsted, you can apply for funding through the online platform. Your nanny must also register as a childcare provider to receive payment through the scheme.

 

Am I eligible for tax-free childcare?

You can apply for funding if you meet the following criteria:

  • Have a child living with you under 12 or under 17 if disabled
  • Be in paid work (both parents/carers or the single parent)
  • Earn less than £100,000 per year
  • Not be receiving other government support towards the cost of childcare (i.e. Childcare Vouchers, tax credits, Universal Credit, Student Bursary, etc.)

How do I sign up?

The government manages tax-free childcare through an easy-to-use online platform. To sign up, you create an online childcare account where you can verify your childcare provider via a search facility and pay the nanny directly, just as you would through a bank account.

Sign up as an employer: www.gov.uk/help-with-childcare-costs

Link for childcare provider/nanny to register: https://www.gov.uk/guidance/sign-up-to-tax-free-childcare-if-youre-a-childcare-provider"

How much will I save?

You can save up to £2000 per child, per year with the tax-free childcare scheme by creating an online childcare account. For every £8 paid into each account, the government will pay in an extra £2. The government will pay up to £500 into the account every quarter, totalling a maximum of £2000 per child, per year.

Will I be better off with Childcare Vouchers or Tax-Free Childcare?

As of October 2018, childcare vouchers are discontinued unless your employer still offers them. You’ll also want to consider that if you have a successful application for Tax-Free Childcare, your tax credits will stop immediately. Universal Credit and Student Bursaries will also be discontinued upon approval of your application.

Still unsure?

If you need further help deciding what is right for your finances, you can use the government’s childcare calculator to compare costs.

Use the childcare calculator >