PAYE: tax-free childcare changes

The government’s new tax-free childcare scheme launches this year, providing working parents and self-employed workers with another option for tax savings on their childcare. Eligible parents will be able to open online childcare accounts to make payments directly to their registered childcare providers, says Jackie Hall, partner at RSM.

The government will top up their payments by £2 for every £8 deposited in the account, up to a maximum of £2,000 of government support per child. In the case of a disabled child, this support is increased to £4,000.

To qualify, parents will have to be in work, and earn at least £115 a week. Each parent must not have income over £100,000 per year. The scheme will be rolled out gradually to families, with parents of the youngest children able to apply first. The government expects to have the scheme fully up and running by the end of 2017.