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tax free childcare letter from hmrc

(36 Posts)
wizzywig Sat 24-Sep-16 12:01:22

Has anyone else received this letter? Basically it seems as though you set up an account and you put in 80% of chilcare costs into it, the government put in 20% and the childcarer then gets paid. Does anyone know if its only for paye folks? Thanks

HSMMaCM Sat 24-Sep-16 12:29:26

I know the new system is supposed to be for self employed people too, but I haven't read all the paperwork yet.

Not sure what happens if you don't pay any tax.

nannynick Sat 24-Sep-16 15:07:34

I have not yet seen this letter but I know they are being sent out to registered providers.

It enables parents to save money, they pay into the scheme and the money gets topped up then sent on to you as the childcare provider.

It can be used to pay for registered or approved childcare. In what capacity are you a registered/approved childcare provider - nursery, childminder, nanny - and in what country are you?

AndNowItsSeven Sat 24-Sep-16 15:13:41

The old system childcare voucher is better as its per payment, the new scheme is per child.

AndNowItsSeven Sat 24-Sep-16 15:14:10

The old childcare voucher via employers is better as its per parent. This new scheme is per child.

nannynick Sat 24-Sep-16 15:39:27

The new scheme is better for parents with several children and for parents who are self employed.
The old scheme is likely to be better for parents of one child where both parents work and are both already getting maximum childcare vouchers.

Each family is individual though, this there is a calculator for parents... will find a link to it.

nannynick Sat 24-Sep-16 15:42:22

https://www.gov.uk/childcare-calculator

Tax-Free Childcare scheme starts in 2017 and is being rolled out, meaning that parents with babies will be offered it first. I expect it to be from April but the date has not been set in stone yet. The scheme is being piloted over the next few months.

nannynick Sat 24-Sep-16 15:49:34

Important: Parents can not be on both schemes, they will need to choose.

Parents with salaries £100,000 plus are exempt from Tax-Free Childcare but they can continue with childcare vouchers. If they earn slightly over £100,000 but pay into a pension their taxable pay may be under £100,000 and thus will be eligible for Tax-Free Childcare.

Other eligibility criteria applies.
Age of child is important, they no longer qualify once past September following their 11th Birthday. Eligibility is checked every 3 months, this helps reduce admin rather than doing eligibility every week/month.

nannynick Sat 24-Sep-16 18:14:23

For any childcare providers reading this who don't know about the Tax-Free Childcare scheme, this document from HMRC explains a little about it: www.gov.uk/government/news/tax-free-childcare-top-things-childcare-providers-should-know
Providers are being written to during September-November this year so that they can register on the scheme before parents start to signup. By having providers register first, it enables parents to quickly find their providers details on the new system. If you don't sign up then parents wanting to use the scheme won't be able to find you on the system when they try to sign up, which may mean they move to a different provider (though I would hope that they would tell you first so that you were able to register).

Mumsnet has information for parents about Tax-Free Childcare: jobs.mumsnet.com/article/tax-free-childcare-10-things-parents-should-know/

AndNowItsSeven Sat 24-Sep-16 19:02:36

Also important to Nate the old scheme is salary sacrifice , the new one isn't.

wizzywig Sat 24-Sep-16 21:46:28

Does hmrc look at the household income? Incase anyone is interested, if you have a child(ren) with disabilities, there are more generous rules: its up to age 17yrs and the maximum contribution is 4k per child per year.

wizzywig Sat 24-Sep-16 21:47:55

Adding to that, im guessing if you claim carers allowance as i do, i cant take part in this as i cant earn more than £110 a week after childcare is taken away

wizzywig Sat 24-Sep-16 21:48:53

Childcare providers includes nannies?

nannynick Sat 24-Sep-16 22:11:30

Yes, for disabled children are eligible longer and higher amount.

Yes, nannies who are approved/registered can be used by parents on this scheme, just like they can for Tax Credits or Childcare Vouchers.

nannynick Sat 24-Sep-16 22:13:31

Income cap for Tax-Free Childcare is per parent. Once either parent earns over the threshold, the family are non-eligible.

nannynick Sat 24-Sep-16 22:34:04

https://www.turn2us.org.uk/Benefit-guides/Tax-Free-Childcare/Can-I-get-Tax-Free-Childcare

Looks like with Carers Allowance you could still have a Tax Free Childcare account as a parent, if you have a partner who is earning over £115.20 per week.

wizzywig Sat 24-Sep-16 23:11:16

Ooh thanks nannynick. My partner does earn over £115 a week. Looking at the link, Ill have to get my nanny ofsted registered too

blondieminx Wed 28-Sep-16 12:02:09

I've had the same letter through. It seems that the new scheme is only for kids up to 12, whereas the salary sacrifice employer voucher scheme covers kids up to 16?

So for parents like me, where I work and have one child, I'd get 4 years LESS tax savings?! shock talk about giving with one hand and taking away with the other!

Overrunwithlego Wed 28-Sep-16 12:07:57

I got one - it was about undertaking a trial of the system before it is officially launched, yes?

I did the survey it gave the link to. As part of that you did an online calculation, looking at your (and if relevant, your partner's) income, average monthly childcare cost, whether either parent's employer currently offered childcare vouchers etc. It then told you whether you would be better off under the new system, or with the existing childcare vouchers. For me it was better to remain on the childcare vouchers - and it therefore told me I was ineligible for the trial of the new system.

Anyone currently using vouchers will be able to stay with that scheme indefinitely. There must be some cut off date whereby new parents not registered for vouchers won't in future get the choice and will only be eligible for the new system.

Overrunwithlego Wed 28-Sep-16 12:17:47

www.gov.uk/government/news/tax-free-childcare-10-things-parents-should-know

blondieminx Wed 28-Sep-16 12:22:36

When I found out it added up to 4 years less support I decided not to take part in the trial.

Another example of spin over substance for "support for working parents" angry

nannynick Wed 28-Sep-16 12:53:53

Those of you who have got a letter, are you a childcare provider, have been a provider but not currently active (though still registered) or are you a parent who has never been a childcare provider?

They are inviting parents to join the trial, around 1000 families are being looked for to test the new system. The aim is to get a good mix of families, varying number of children, ages of children, some self employed, others employed.

Providers are being signed up in batches, letters started going out earlier this month and will continue going out over the next couple of months. This should help to ease demand on the provider registration system and help have as many providers registered on the system come public launch of the scheme (date yet to be confirmed).

nannynick Wed 28-Sep-16 12:59:15

https://www.gov.uk/childcare-calculator

Anyone can use the calculator to see which scheme is best for their family.

Yes, there are differences in terms of eligibility. New scheme is up to September following child's 11th Birthday.

I guess Government may be thinking that most parents use registered childcare for young children, not secondary school aged children.

Overrunwithlego Wed 28-Sep-16 13:57:17

nannynick I am a parent currently using the childcare voucher scheme to pay for before and after school clubs, and holiday schemes.

I can see there are advantages to the new scheme - it is open to those whose employers don't offer vouchers and the self employed for example. For me the issue of only being eligible up until 12 is not an issue - I don't envisage needing childcare once they are in secondary school.

For me the calculator showed I save more with vouchers though, so I will stick with those as I have the choice. Of course if I were to move jobs after April 2018 when the voucher scheme closes to new applicants (even within the NHS where I am employed) I would have to come out of the voucher scheme and use the new system.

drspouse Wed 28-Sep-16 14:06:19

You can use childcare vouchers for holiday clubs (and some of those are open to over 11s) and PGL, though. And if you have a babysitter that takes them you can use them then (e.g. with a 12 year old that doesn't really want to be alone all evening).

It doesn't ask about workplace nurseries (I already knew the new scheme wouldn't work for us but thought I'd check) because most of our nursery care comes under this - we use vouchers for CM/after school club/holiday club.

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