Tax-Free Childcare (TFC)

As you may be aware, in April 2017,  the Government introduced a replacement scheme for Childcare Vouchers.  TFC isdifferent to childcare vouchers, and is not offered through your employer.  The new scheme works very differently to the current scheme, allowing parents to claim 20p for every 80p spent on childcare costs up to a maximum of £2000 saving. 

 

TFC will work a bit like a savings account. You pay money into an account from your net pay, so it’s taken after tax and National Insurance have been deducted. Then for every 80p you pay in, the Government adds 20p. You will need to pay in £8,000 to reach the maximum Government contribution of £2,000 per child per year.

 

Being eligible for TFC depends on your family situation.  For many families, childcare vouchers will save you more money than Tax-Free Childcare (TFC). It’s important you know which is best for you, however if you are not a member of the childcare voucher scheme it is now closed to new applicants.

 

 

Like many changes to tax efficient benefits there are many considerations to be made: The main points are:

 

Tax Free Childcare (TFC)

•           Both parents must be working a minimum of 16 hours per week each

•           Eligibility will be reassessed every 3 months

•           Max age 12 (currently 15)

•           You will not be eligible if claiming Universal Credit

 

Childcare Vouchers (CCV)

•           No eligibility checks

•           Taken straight from salary

•           Both parents can claim via employer

•           Min £20pa to remain protected within the Councils run CCV scheme

 

 

 

Further help to reach a decision on whether TFC or vouchers are the most cost effective for you can be found at:

 

www.giveyourselfachoice.com 

http://www.tax-free-childcare.info/

www.moneysavingexpert.com/family/tax-free-childcare 

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