Are your staff aware of the £2,000 funding to help with childcare costs?

Employers should make their staff aware of Tax-Free Childcare that offers up to £2,000 in government funding to help with childcare costs

Any of your staff, who are parents or carers, could get up to £500 every 3 months (up to £2,000 a year) for each of their children to help with the costs of childcare. This goes up to £1,000 every 3 months if a child is disabled (up to £4,000 a year). For every £8 your worker pays into their Tax-Free Childcare account the government will pay in £2. They can then use their account to pay their childcare provider.

What they can use Tax-Free Childcare for?

Any of your staff that are eligible for Tax-Free Childcare can use it to pay for approved childcare including:

• childminders, nurseries and nannies
• after school clubs and play schemes

Their childcare provider must be signed up to the scheme before they can pay them and benefit from Tax-Free Childcare. They should check with their provider to see if they are signed up.

Eligibility

Your staff that are parents or carers may be eligible for Tax-Free Childcare if they:

• Have a child or children aged up to 11. They stop being eligible on 1 September after their 11th birthday. If their child has a disability, they may get up to £4,000 a year until they are 17.
• Earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average.
• Each earn under £100,000 per annum.
• Do not receive tax credits, Universal Credit or childcare vouchers

Childcare provider in the Republic of Ireland

If your employee lives and pays tax in Northern Ireland but use a childcare provider in the Republic of Ireland, they should call 0300 123 4097 to check their eligibility.

Working in the Republic of Ireland

If your employee lives in Northern Ireland but works in the Republic of Ireland, they’re eligible for Tax-Free Childcare if they or their partner pays UK tax and completes an annual Self-Assessment tax return and foreign income page.

How Tax-Free Childcare works

If your worker thinks they are eligible they will have to apply for Tax-Free Childcare through GOV.UK. They will need their details (and they're partner's details, if they have one), including:

• National Insurance number
• Unique Taxpayer Reference (UTR), if they are self-employed

It takes around 20 minutes to complete the application process.

Once their application is successful, money can be paid into the account and the government will top this up by paying in £2 for every £8 that is paid in, up to a maximum of £2,000 a year (or £4,000 if your child has a disability). They can then pay their childcare provider with money from their account once the money is shown as 'cleared funds'. Payments should show in the childcare provider's account within 24 hours, depending on their bank.

They must reconfirm their details are up to date every 3 months. They will be sent a reminder to do this.

Read full details on Tax-Free Childcare.

Employer's guide to childcare

The Employer's Guide to Childcare highlights the financial support available to assist working parents with their registered childcare costs. The dedicated guidance also offers tips on how and when to engage with staff regarding childcare issues. There is also a list of contacts where employers and their staff can get further advice and help.

For further details, download Employer's Guide to Childcare - Supporting Employees to Access Childcare Support (PDF, 934K).

First published 18 October 2022