Newsletter Spring 2018

Childcare support

Tax free childcare accounts can now be opened by all eligible parents who have children aged under 12, or under 17 if the child is disabled. For every £8 the parent deposits in the account, the Government will contribute £2, up to a maximum of £2,000 of Government support per child per year. Those limits are doubled for disabled children.

Parents who open a tax free childcare account are not supposed to double-up their childcare support by also receiving childcare vouchers or directly paid-for childcare from their employer. The parent should tell their employer in writing that they have opened a tax free child care account within 90 days, and the employer should take that employee out of the childcare scheme.

All employer-provided childcare voucher schemes were due to close to new entrants in April 2018, but this deadline has been extended to October 2018. This is good news, as the tax and NIC-free childcare vouchers can be given to parents whose youngest child is aged 12 or more, and hence don't qualify for the tax free childcare account. Employer-provided childcare vouchers can be used to provide care for any child under school leaving age.

Many families ask the child's grandparents to provide childcare on an informal or formal basis. Where those grandparents are under state pension age, and they care for a child aged under 12, they can claim adult childcare National Insurance (NI) Credits.

The person providing the care must be a relative of the child and mustn't be paying NIC on another job at the same time.

The child's parents must be entitled to child benefit for the child (but don't have to be actually receiving that benefit). This type of NI credit has only been available since 2011 and it is not widely advertised by HMRC.