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Tax-free childcare update

Tax-free childcare (TFC) was announced by the Government in 2013 as a way of supporting families with meeting the cost of childcare. The scheme is due to launch in 2017. Aimed at helping working families, the scheme will offer eligible families 20 per cent support towards the cost of their childcare - the equivalent to basic rate tax relief - up to an annual limit of £2000 per child, or £4000 if the child is disabled. The scheme will be available for children up to the age of 12, or 17 if they are disabled.

Operated through an online account, parents will pay money towards qualifying childcare costs and the government will automatically make "top-up" payments of 20p for every 80p that families pay in. In a year, if an eligible family pays £8000 into their TFC online account, the government will top this up to £10,000.

Parents will then be able to make payments for childcare costs directly to their nominated childcare provider(s) through this account.

PACEY is involved in implementation forums to help ensure that the new scheme is workable for childcare professionals, and we will share more details of the scheme, including how to sign up, when the information is available. Future forums will also discuss the implications of 30 free hours on TFC.

The scheme has wide support, and the new ministerial Childcare Implementation Taskforce, chaired jointly by Priti Patel and Sam Gyimah, has been meeting fortnightly to oversee the development and implementation of childcare support across government.

There will be a small scale trial prior to the public rollout, using a cross section of groups, before rolling out the scheme in 2017. Parents will be able to access TFC for all their children as soon as their youngest child is eligible.

See: 10 things all parents should know about tax-free childcare