In his 2015 Autumn Statement, the chancellor announced that there would be two changes to the qualification criteria for the government's Tax Free Childcare account which is being introduced in 2017.
Please note: further changes have been made to the scheme since the Autumn Statement announcement, see Tax-Free Childcare for the latest details.
- The upper earnings limit is being dropped from £150,000 to £100,000
- Both parents must be working the equivalent of 16 hours at the National Minimum Wage, doubled from 8 hours.
What is the Tax Free Childcare account?
- To be introduced from early 2017
- Available to the self-employed and employees whose employer does not provide employer-supported childcare
- Managed via parents' on-line account
- Government top-up of 20p for every 80p paid to a maximum of £2,000 per child (for an £8,000 injection by parents)
- Both parents must be working the equivalent of 16 hours at the National Minimum Wage.
- Upper earnings ceiling: ineligible if either parent earns over £100,000 pa
- Covers all children up to age 5 (or up to age 16 for disabled children)
- Not available if parents claim tax credits or universal credit
- Current employer-supported childcare arrangements (vouchers and contracted childcare) continue so long as employer is willing to continue them and employee stays with the same employer
- Employer-provided nurseries are unaffected by the new scheme