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TLC Loves… cheaper childcare options

With childcare bills equalling mortgage payments for some families, anything that can be done to make it cheaper is welcome. But when you run your own business or are self-employed, what are the options? Here’s our quick run-down of the current childcare choices.

Tax-Free Childcare – a new scheme launched by the Government in April 2017, this allows parents of children under 12 to immediately benefit from a contribution to childcare costs by paying into a digital Tax-Free Childcare account. Unlike childcare vouchers (see below for explanation) you can take advantage of this scheme if you are self-employed and there’s a start-up option where you don’t have to earn the minimum limit (currently £115.20/week). Others (grandparents perhaps) can also pay into the account to contribute to childcare costs.

For every £8 paid in, the Government will contribute £2 up to a limit of £2,000/child/year. There are some catches though; you can’t pay in if you or your partner take advantage of an employer’s childcare voucher scheme, you must earn less than £100,000/year (double for a couple) and both parents must be in work.

The scheme is flexible so you can pay in what you want, when you want – unlike childcare vouchers which are a set amount taken from your wage each month. You can also withdraw your money – minus the Government’s contribution – if your circumstances change or you no longer want to pay in.

You can use the money to pay registered childminders, nurseries or nannies, for registered after school clubs and play schemes, for registered schools or for home care workers who work for a registered care agency. Happily you can combine this scheme with the 15 or 30 free hours offered for 3 and 4 year olds.

30 hours free childcare for 3 and 4 year olds  – from September 2017 the number of free hours of childcare provided for 3 and 4 year olds doubles from 15 hours to 30. As with the Tax Free Childcare scheme both partners must be in work, although there are some exemptions for those on maternity/paternity leave, the disabled and those with caring responsibilities.

The childcare is provided by participating private nurseries, childminders, Sure Start centres and pre-schools.

Childcare vouchers – any limited company can currently choose to offer a childcare voucher scheme, even if only one person works for the company. There’s a wide range of suppliers who all charge a nominal fee to administer the scheme. Money is taken from your wage before tax and put into an online account, from which you can pay providers registered with that scheme.

The amount you can save in Childcare Vouchers varies depending on your earnings. Childcare vouchers will be replaced with Tax Free Childcare, with no new applications accepted from April 2018, although parents already using a scheme can continue to do so after this date as long as the employer is continuing to offer the scheme.

The Government’s Childcare Choices website provides a handy childcare calculator on its website to help you work out what’s best for your situation. Of course, we’re always happy to help too, so just give us a call if you have any queries.

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