Tax-free childcare: How to claim up to £2,000 a year for kid's summer holiday clubs and childcare

PARENTS planning for the school summer holidays can get thousands of pounds of help paying for childcare.

Kids activities over the summer like holiday clubs and sports activities are covered by the tax-free childcare scheme.

Just a fraction of parents eligible for the government support to cover childcare costs are claiming the cash, which is worth up to £2,000 a year for each child.

The scheme can be used for childcare throughout the year and a range of options over the summer months when kids are not at school.

The government is reminding parents that this includes holiday clubs, childminders and sports activities

Myrtle Lloyd from HMRC said: "We want to help kids stay active this summer, whether they are going to summer holiday clubs or a childminder.

What help is available to parents for childcare costs?

CHILDCARE can be a costly business. Here is how you can get help.

  • 30 hours free childcare  – Parents of three and four-year-olds can apply for 30 hours free childcare a week.
    To qualify you must work at least 16 hours a week at the national living or minimum wage and earn less than £100,000 a year.
  • Tax credits – For children under 20, some families can get help with childcare costs.
  • Tax-free childcare – Available to working families and the self-employed, for every £8 you put in the government will add an extra £2.

"A childcare top-up will go a long way towards helping parents plan and pay for summer activities to keep their kids happy and healthy.

Tax-free childcare offers a top-up of £2 from the government on top of every £8 you spend on childcare.

This is worth up to £500 over three month, so £2,000 over a year and that's for each child.

If your child has a disability the amount you can get is higher: £1,000 every three months, adding up to £4,000 each year.

Tax-free childcare is available at the same time as claiming 30 hours free childcare, which is a separate scheme.

Who is eligible for tax-free childcare

Eligibility for tax-free childcare depends on a number of things.

For instance, if either you or your partner earns over £100,000 (including bonuses) then you won't qualify for the scheme.

You also need to meet several other criteria around whether you work, how much you earn and whether your partner has a job.

Working criteria

If you are working, you can usually get tax-free childcare if you (and your partner, if you have one) are:

  • in work
  • on sick leave or annual leave
  • on shared parental, maternity, paternity or adoption leave

If you've lost work because of coronavirus, or your work pattern has changed you might still be able to qualify.

You can still apply if:

  • you’re on furlough through the Coronavirus Job Retention Scheme
  • you’re claiming a Self Employment Income Support Scheme grant

If you aren't working, you can still apply if you get Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or contribution-based Employment and Support Allowance.

Income criteria

To qualify, you need to earn over a certain threshold for the next three months, – the equivalent of the National Minimum Wage for 16 hours a week on average.

For example, at the moment you would need to earn at least £1,853.28 – the National Living Wage for people over 23 – over the three month period.

If you have a partner, they’ll need to expect to earn at least this much too.

If you’re self-employed and do not expect to make enough profit in the next three months, you can use an average of how much you expect to make over the current tax year.

This earnings limit does not apply if you’re self-employed and started your business less than 12 months ago.

Criteria for your child(ren)

Your child must be 11 or under and usually live with you. They stop being eligible on September 1 after their 11th birthday.

Adopted children are eligible, but foster children are not.

How does tax-free childcare affect other benefits?

You can't get tax-free childcare at the same time as claiming Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers.

If you successfully apply for tax-free childcare, your Working Tax Credit or Child Tax Credit will stop straight away. You will not be allowed to apply for them again.

Wait until you get a decision on your tax-free childcare application before cancelling your Universal Credit claim.

The scheme that is best for you depends on your specific situation. You can use the childcare calculator to work out which type of support is best for your family.

How to apply for tax-free childcare

There's one application for tax-free childcare and 30 hours free childcare. As part of your application, you will find out if you can get both.

You need to apply online – via the government website.

You'll need to set up the account, and use it to pay for your registered childcare.

You’ll need details to hand for both you and your partner including:

  • National Insurance numbers
  • Unique Taxpayer Reference (UTR), if either of you are self-employed

It takes 20 minutes to apply, and it can take up to seven days to find out if you are eligible.

You need to reconfirm your details every three months to keep getting the help.

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