The Tax-Free Childcare Scheme is a government initiative designed to help working parents with the cost of childcare. If you’re considering hiring a nanny or already have one, this scheme could significantly reduce your childcare expenses. In this guide, we’ll explain how the scheme works, who is eligible, and where to find more information.
What is the Tax-Free Childcare Scheme?
The Tax-Free Childcare Scheme allows eligible parents to receive up to £2,000 per child per year (or £4,000 for children with disabilities) towards childcare costs. The government contributes £2 for every £8 you pay into an online childcare account, which can then be used to pay for registered childcare providers, including nannies.
Who is Eligible?
To qualify for Tax-Free Childcare, you must meet the following criteria:
- Both parents (or a single parent) must be working and earning at least the National Minimum Wage for 16 hours per week.
- Each parent must earn less than £100,000 per year.
- Your child must be under 12 years old (or under 17 if they have a disability).
- Your nanny must be registered with Ofsted or the equivalent regulatory body in Scotland, Wales, or Northern Ireland.
The scheme is open to self-employed parents as well, making it a flexible option for many families.
How Can It Help with the Cost of Hiring a Nanny?
For families hiring a nanny, the Tax-Free Childcare Scheme can make a significant difference in managing costs. By using the scheme:
- You effectively get a 20% discount on childcare costs.
- You can use it to cover nanny salaries, childcare agency fees, and other approved childcare expenses.
- The savings can offset the cost to hire a nanny, making high-quality one-on-one childcare more affordable.
Where to Find Out More
To check your eligibility and apply, visit the official government website for Tax-Free Childcare. You can also get further guidance from HMRC or a payroll specialist.
Let PAYE for Nannies Handle the Payroll for You
At PAYE for Nannies, we take care of all the complexities of hiring a nanny, including payroll, tax, pensions, and HR advice. We can also guide you on how to integrate the Tax-Free Childcare Scheme into your payments, ensuring you maximize your savings.
Contact us today to learn more about how we can make the process easier for you.
