What are Childcare Vouchers? What is Tax-Free Childcare? They are both benefits that can help you pay for approved childcare if you have children. Moreover, it’s important to know about both benefits, for reasons laid out in this article. This Your Benefits article will walk you through all you need to know about Childcare Vouchers and Tax-Free Childcare.
What are Childcare Vouchers?
Childcare Vouchers is a scheme that allows parents to cover some childcare costs. More specifically, they could be able to save up to £1,000. Typically, the vouchers are bought through things like sacrifice salary schemes.
Will I continue to receive Childcare Vouchers if I already do?
If you already receive vouchers, you will continue to do so. Indeed, this will be the case so long as the following apply:
- The eligibility of your children did not change;
- You still work with the same employer;
- You have not successfully claimed Tax-Free Childcare;
- Vouchers were sent to you within 12 months (this can be any 12 months period. Additionally, you received at least one wage adjustment).
You may not receive Childcare Vouchers and Child-Free Childcare at the same time. Whichever is best for your situation depends on your individual circumstances. Additionally, you may decide to switch to Tax-Free Childcare later on.
Can I continue to receive Childcare Vouchers if my partner receives Tax-Free Childcare or I leave my job?
You may not receive Childcare Vouchers if your partner is claiming Tax-Free Childcare. However, as said previously, you will be able to use the vouchers you have accumulated. This is because Edenred vouchers do not expire. This is regardless of whether you are earning Tax-Free Childcare or not.
You are able to modulate how much you receive with the vouchers. This is true if you are still eligible for the scheme.
You may leave your job. If this is the case, your vouchers may have certain additional conditions of usage. Then, contact your HR team for more information. Note that this then means that you may not receive your vouchers. This is because leaving your job also means leaving the scheme.
Additionally, the scheme is closed to new applicants. As such, you will not be able to rejoin it through a different employer. Note that you can use these vouchers at the same time as the ‘30 free hours‘ scheme.
What is Tax Free Childcare?
If you are eligible for Childcare Vouchers, you also likely qualify for Tax-Free Childcare. This is a benefit you may be able to earn, which would award you payments. You can use the money to use towards approved childcare. Moreover, you could get a maximum of £500 every 3 months.
The way that the benefit works is through your Government Gateway account, on the Gov.UK website. Moreover, you will set one up for your child. Also note that you may earn Tax-Free Childcare and 30 hours free childcare at the same time.
What can I use Tax-Free Childcare for?
Like Childcare Vouchers, you may use Tax-Free Childcare to pay for approved childcare. In fact, approved childcare includes the following:
- Nannies, childminders and nurseries;
- Play schemes and after school clubs.
Your child may be disabled. If this is the case, you can use extra Tax-Free Childcare amounts you receive. Then, they can cover the costs of extra childcare hours. Additionally, your child may need special equipment. As such, you can also use the money to cover the costs for this.
You need to register with Ofsted in order to be a childminder or nanny. Additionally, registering as such can cost money. The following are the costs linked with registering as a nanny and childminder:
| Costs linked with nanny and childminder registration in 2022 | ||
|---|---|---|
| Fee for childminders | Fee for nannies | |
| Taking care of children 5 years and younger | £35 | Not applicable |
| Taking care of children 5 years and older | £103 | Not applicable |
| Taking care of children of any age | £35 | Not applicable |
| Register as a nanny | Not applicable | £103 |
| Checking your criminal record | £48.10 | £48.10 |
| Checking the criminal record of adults in your home | £48.10 per adult | Not applicable |
| Recommended criminal record check update service | £13 per year | £13 per year |
| Getting a health declaration booklet filled and signed by a GP | About £90 | Not applicable |
Apply for Tax-Free Childcare
Unlike Childcare Vouchers, you can apply for this benefit. More specifically, online on the Gov.UK website. Indeed, you may then use the online service to pay your childcare provider directly. Furthermore, you will need a couple of information in order to apply. They consist of the following:
- National Insurance Number;
- If you are self-employed: your Unique Taxpayer Reference (UTR).
You may use the money on your account to pay your childcare provider. This is once the money is shown as being ‘cleared funds‘. Payments will typically take about 24 hours to reach the account of the childcare provider.
You can apply on the Gov.UK website. The application should take around 20 minutes. Additionally, you may have a partner. They will have to be included in the application if the following is true:
- You are either in a civil partnership or married, and you live together;
- You are not in a civil partnership or married, but you both live in the same home as if this was the case.
Tax-free childcare eligibility
Your eligibility for this benefit depends on a number of factors. Mainly, the following:
- Whether you work or not;
- What your income is (this includes the income of your partner, if you have one);
- The circumstances and age of your child;
- Your immigration status.
You may work. If this is the case, you could be eligible for Tax-Free Childcare. Then, this could be the case if you are:
- Working;
- On paternity, adoption, maternity or shared parental leave;
- On annual or sick leave.
You may not be working. If this is the case, you could still be eligible if you receive one of the following:
- Carer’s Allowance;
- Incapacity Benefit;
- contribution-based Employment and Support Allowance (ESA);
- Severe Disablement Allowance.
You may apply for this benefit if going back to work or starting work in the next 31 days.
Does my income affect Tax-Free Childcare?
You will need to earn a certain amount over the next 3 months. More specifically, it will correspond to the National Minimum Wage or Living Wage. Additionally, the total amount must be over that wage, for at least 16 hours weekly on average.
You may have a partner. If this is the case, they must have the same income requirement. Moreover, you may be self-employed. Additionally, you do not expect to make a profit over the next 3 months. If this is the case, you may use your yearly income for the tax year to qualify.
