Top things childminders need to know about Tax-Free Childcare

The Care Inspectorate has published information on the top things childminders need to know about Tax-Free Childcare.Tax-free childcare is a new government scheme to help working parents with the cost of childcare. From early 2017, parents will be able to open an online account, which they can use to pay for childcare from a registered provider.

During September and October 2016, the Government will send letters to registered childcare providers across the UK. These letters will invite childcare providers to sign-up online for Tax-Free Childcare.  

Providers will be able to sign-up as soon as they receive their invitation. They will then appear on HMRCs new digital tool, which lets parents search for childcare providers signed up for Tax-Free Childcare. This tool will be available from early 2017. The scheme will offer eligible working families 20 per cent support towards the cost of their childcare up to an annual limit of £2000 per child (or £4000 if the child is 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 Tax-Free Childcare 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.

Tax-Free Childcare will be rolled out gradually in early 2017 on an age-based approach, allowing parents of the youngest children to enter first. Families with multiple children will be able to join the scheme when their youngest child becomes eligible, and at that point they will be able to receive support for all their qualifying children. All disabled children will be prioritised so they will join the scheme early on in the rollout process.

Childcare providers will be able to sign up for Tax-Free Childcare from September 2016

The Government is recommending that providers take steps now to ensure they are ready:

1. You must be a regulated or approved childcare provider to receive Tax-Free Childcare. Only childcare providers registered with a regulator can receive Tax-Free Childcare payments. To register can take up to 12 weeks. If you aren’t, do so now, so that your customers can pay you using Tax-Free Childcare. For registration timelines, please check the appropriate regulators website.
   
   
2. Check that your regulator has your current address. You’ll only receive an invitation to sign up for Tax-Free Childcare if your regulator has your current address, so check that this is up to date. Once you’ve signed up, you’ll appear on a new digital tool which lets parents search for childcare providers who can be paid using Tax-Free Childcare.
   
   
3. Be ready for Tax-Free Childcare. As a childminder you'll need your 10-digit Unique Tax Reference (UTR) number to sign up for Tax-Free Childcare. This is the number that HM Revenue and Customs (HMRC) gave you when you first told HMRC that you were working for yourself. You can find your UTR on any HMRC communications, for example, your tax statement or payment reminder, or by logging onto your Personal Tax Account. If you can’t find your UTR number, HMRC can send this number to your address. For more information call 0300 200 3410.
   
   
4. Making Tax-Free Childcare payments will be easy. When you signup, you’ll need your bank details. Parents will then be able to send you payments directly from their Tax-Free Childcare accounts to your bank account (via BACS). Each child will have a Tax-Free Childcare reference number. Parents can let you know their reference number to help you identify their payments.