Over 10,400 families in Northern Ireland are benefitting from Tax-Free Childcare to help with their childcare costs
There are a number of forms of support available towards registered childcare costs one of which is Tax-Free Childcare. Over the years the uptake for Tax-Free Childcare has been low in Northern Ireland. However, over the last year there has been a significant increase – of around 30% – in the number of families claiming support through the scheme.
Figures recently released by HMRC show that 10,405 families in Northern Ireland were using their Tax-Free Childcare accounts in December 2022, this is an increase of 2,420 since the previous year. These accounts have been used to pay for childcare for total of 13,470 children, which is an increase of 32% since December 2021.
While a positive development, we know that there are many more families who are still missing out on support they could be entitled to, or who could be benefitting more from another form of support.
There are a range of support schemes available (Tax-Free Childcare, Childcare Vouchers, Universal Credit and Tax Credits) and it can be complex to work out what will provide the best support. We are here to help – our Family Benefits Advice Service can do a ‘better off’ calculation (looking at income and childcare costs) and help families to work out what is right for them. Below is a short overview of the Tax-Free Childcare scheme and how it supports working families.
What is Tax-Free Childcare?
The Tax-Free Childcare scheme allows eligible working families to claim 20% of their registered childcare costs, up to £2,000 per child per year, or £4,000 for a child with a disability, from HMRC.
To claim Tax-Free Childcare, both parents need to be in employment (or one person in a single parent household), earning between £152 per week (equivalent to 16 hours working at the National Living Wage) and £100,000 per year each. So, for example, a household where each parent is earning £95,000 (combined income of £190,000) would be eligible.
Tax-Free Childcare is also available to self-employed parents (where eligible). Households where one parent is working, and the other parent is in receipt of Carer’s Allowance or certain disability benefits can also qualify.
The scheme is open to parents of children under the age of 12 (or age 17 for children with disabilities).
Savings are not taken into account in determining if a parent is eligible for Tax-Free Childcare.
For more detailed information you can download our Comprehensive Guide to Tax-Free Childcare here.
Further information
We would encourage all parents to make sure they are receiving all the financial support they are entitled to with their childcare costs, and to check regularly that they are receiving the best form of support for their family.
If you would like further advice on help with childcare costs or wish to find out more about what financial support you may be entitled to, contact our Family Benefits Advice Service for free, impartial and confidential advice. Call us on 028 9267 8200 or email hello@employersforchildcare.org – we are here to help.