After sending our August Newsletter, we received a response from Maureen Askew - owner of childcare business consultancy Ask Askew. Maureen highlighted that a couple of the points in our article, 'New Government Childcare Schemes' were potentially slightly misleading.
So, to clarify things in a simple and factual way, Maureen has kindly written a couple of articles on the tax free and 30 hours free childcare schemes for working parents. Please read on...
30 HOURS FREE CHILDCARE
The Government scheme to provide working parents of 3 and 4-year-old children with an additional 15 hours of free childcare launched on September 1st, 2017.
What does it mean for parents?
All 3 and 4-year olds are eligible for 15 hours of free childcare for 38 weeks of the year (570 hours in total). BUT, working parents of 3 and 4-year old children may now be eligible to apply for a further 15 hours (another 570 per year); totalling 30 per week (1140 per year).
Note: the total hours per year don’t have to be taken over 38 weeks, they can be stretched over more weeks of the year if required/wanted.
In single parent families, the parent must be in work and earning on average at least £120 a week.
In two-parent families, both parents must be in work and each earning on average at least £120 a week.
If one parent is on maternity, paternity or adoption leave, or unable to work because they are disabled or have caring responsibilities, they could still be eligible.
The earnings limit doesn’t apply to the self-employed that have been in business for less than 12 months.
If one parent earns, or both parents earn more than £100k per annum, they are not eligible for the additional 15 hours free childcare.
Note: If a parent becomes unemployed, there is a grace period of approximately a term during which the child will continue to receive the additional 15 hours. This is to allow time for the parent to find alternative employment, and ensures there is some continuity for the child and childcare provider.
How does the system work?
Parents apply online (here) and sign up for a childcare account. The one account is used for applying for the additional 15 hours free childcare and for Tax FreeChildcare (see below).
Eligibility will be determined during the application process.
Once eligibility for the additional 15 hours has been confirmed, parents will be issued with a code. This code needs to be verified every 3 months (parents will receive an email to remind them).
Parents take the code to their Ofsted registered childcare provider. The code is then verified by the local authority, after which the parent can access the additional free childcare hours.
Parents can continue to receive the following types of support at the same time as receiving the additional free 15 hours. (15 hours universal and 15 additional hours = 30 hours of free childcare in total):
childcare vouchers or salary sacrifice schemes
childcare grants and bursaries
Points worth consideration…
Some childcare providers (nurseries, pre-schools, registered childminders) will NOT offer the additional free 15 hours. And those that do may limit the additional hours to specified times of the day or days of the week, or offer a limited number of places. This might mean parents are unable to access the additional 15 hours at a provider of their choice.
The scheme does not cover any additional services a childcare provider may offer. Parents may find providers charge for things like meals, snacks, trips out etc. However, these charges cannot be a condition of parents taking up a free childcare place.
If a child attends a childcare provider for more than the free 30 hours week (38 weeks a year), the parent will have to pay for the additional childcare hours at the rate the childcare provider has determined.
TAX FREE CHILDCARE
Parents open a secure childcare account (here).
Parents pay as much as they like into this childcare account.
For every £8 paid into their childcare account, the government will add an extra £2 (up to a maximum of £2,000 per child per year, or up to £4000 for children with disabilities).
Childcare providers are paid directly from the account.
Should parents wish to withdraw funds, they will not be able to withdraw the additional 20% government contribution.
The scheme is available to parents with children under 12 (or under 17 if disabled).
You’re usually eligible if you (and your partner, if you have one):
are 16 or over
live or work in the UK
are employed or self-employed
are over 21 and earn on average at least £120 a week, unless in your first year of self-employment. Different rates apply if you're under 21 or an apprentice
earn less than £100,000 a year each
don't get other support with your childcare, including from a childcare voucher or salary sacrifice scheme
Note: Parents CAN’T use Tax-Free Childcare at the same time as they receive childcarevouchers, Universal Credit or tax credits.
*Registered childcare providers = private day nurseries; pre-schools/playgroups; registered childminders; holiday or out of school clubs; maintained nursery schools offering extended hours.