The demands that the economy has been placing on women to join the working force rather than remain at home, have led to recent changes in the child-care system. In order to make it simpler for women to return to the workforce after giving birth, the government has launched the tax-free childcare scheme, which we shall be discussing in more detail here. This scheme will be launched as from early 2017. Let us go over the main ten points that parents should be aware of to make the most out of this scheme.
- More convenience with an online account – parents are being given the opportunity to open an online account which will be used for the purpose of financing their kid’s childcare. The childcare provider needs to be a registered provider.
- The government will be topping up every 80p to £1 – to make the whole process easier to understand, just consider that the government will be topping up every 80p you pay into this account, to £1. So for every 80p the government will essentially be giving 20p. This will apply for up to a total of £2,000, or £4,000 in case of disabled children.
- Improved age thresholds – the scheme applies to children up to the age of 12, or 17 in case of disabled children.
- The earnings – parents will have to be earning over an average of £50 weekly, and not more than £150,000 annually in order to qualify for this scheme.
- The scheme does not rely on employers – the scheme will not rely on employers who are willing to offer it. So any working family can make the most of it as long as they qualify.
- Self-employed parents can apply too – this scheme is also open to self-employed parents. For new self-employed parents, there is also going to be a start-up phase, during which parents will not have to earn a minimum income level so as to be eligible for the scheme. Parents who are on paid sick leave, or paid/unpaid statutory paternity, maternity or adoption leave can also apply.
- Switching to tax-free childcare if optional – if you prefer the current employer-supported childcare, you will be able to retain it, even when the new tax-free childcare system is introduced. Employers’ workplace nurseries will not be affected by the new scheme either.
- A flexible account – besides parents, anybody else can contribute to the childcare account – this could be grandparents, aunts and uncles. Besides, you will be able to pay in more on some months, and less on others. Thus it is a very flexible process.
- A simple process – besides being increasingly flexible, the process is also going to be straightforward for parents. Since it is accessible online, parents will be able to keep an eye on the account, or on all the accounts, if they have more than one child. A re-confirmation of circumstances can be carried out easily every three months from the comfort of their home or office, by accessing the account/s online.
- Withdrawing from the account – should parents face circumstances where they will need to withdraw money from the account, they are going to be allowed to do so. However, any corresponding contributions that had been placed by the government would have to be withdrawn too.
By bearing these main aspects in mind you will be better able to make a well informed decision about the tax-free childcare system when it is launched in 2017.
