Tax-Free Childcare Available on School Holiday Clubs

Tax-free childcare

When the time comes for the school to approach the Summer holidays, HMRC tends to give a refresher to the parents and the guardians to join the holiday club where they can avail tax-free childcare. This means when the parents join the holiday club school for their kids, they will not pay any kind of tax on the club fees. According to research 1 out of 3 parents find it complicated to manage the payments and tax on the holiday school clubs. You do not need to worry, tax-free childcare scheme is your go-to option.

Moreover, it does not matter what is the employment status of the parents, they can simply go to explore the easy process of availing of tax-free childcare just from the online forum. There are different childcare choices offered by the government, the only condition that applies to this case is that the child should be under 12 years of age. Further in this guide, we will explore how to define TFC, the eligibility criteria for the parents, and how it works for parents and providers.


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What is Tax-Free Childcare (TFC)?

The tax-free childcare scheme is for the parents and families who are eligible according to the criteria, a certain amount will also be given for childcare to deserving individuals. The great news is that it is completely tax-free. This includes taking care of the holiday club, after school, breakfast, and other related expenses. In the initial stage, this scheme was only applicable for a certain age group of early years, however, gradually it gained popularity and the government made it allowable for older children as well.

That means that the children that are under the age of 12 are allowable for this tax free childcare amount and in the case of children with disabilities, it considers the disabled children till the age of 17. Parents need to consider the time limit and deadlines for the entry and those who have already started the process can continue to use the available benefits.


Eligibility Criteria of Tax-Free Childcare

This scheme is good enough for parents with any employment status. Whether they are self-employed or employees of a company, they can apply because the offer is equally open for both cases. The only condition that is to consider is that there is a limit to the minimum and maximum amount that parents are earning in a month. Several people mix up the concept of the Childcare Voucher scheme and childcare scheme. In that case, the limit of learning is different for the parents to meet the criteria.

Whether you choose to gain benefits from a tax-free childcare scheme or any other all you will have to consider is the employment status of the parents, whether both are working or one, parents are self-employed or working through a company. The number of children will also affect the process of any childcare scheme.


How Does TFC Work for Eligible Parents?

The first and main thing to do for the eligible parents is to make an online childcare account with the use of the website Gov.UK. Every time the parent will deposit the amount in this account, the government will immediately add part of the amount. To pay for the setting of childcare, parents are allowed to use the amount deposited in the childcare account.

Keep in mind that the setting body has to be the UK registered. Another important condition for the parents is that they are not allowed to avail of the offer of the tax-free childcare scheme if they are already getting the benefits of childcare from any other schemes in the UK. Other such beneficial scenes are employer-supported Childcare Vouchers, universal credit or childcare element of Tax Credits.


How Does TFC Work For the Providers?

When the process of setting up the account for the childcare scheme is done and the deposit is done by the parents, you are good to go for the payments to be sent to the registered provider of the childcare. There is a unique reference number for every child that will help the provider to identify the child and his payment.

It is required for the providers to get registered for the tax-free childcare scheme before the parents are doing it. In the case of the unregistered providers, there is an invite to sign up is communicated by HMRC. In some cases, people do not receive any invitation to sign up or they lose their sign-up letter, it is better to reach out to the childcare service helpline immediately in such a scenario.


The Bottom Line

Now that you have gathered a fair amount of information about tax-free childcare, we can bring the discussion towards wrapping up, we can say that the childcare scheme is beneficial for the parents and disabled children until the age of 17 years, however, it is required for you to consider the eligibility criteria and the limit put to meet the standards. We hope these few minutes of reading have helped to develop a better understanding and you will be able to handle childcare matters more efficiently.


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