Overview Of The TFCS
The Tax-Free Childcare Scheme (TFCS) is open to all eligible families with children under 12. Latest figures have revealed that 248,000 families used the TFCS for 287,000 children in the quarter ending 31 December 2020 with the government adding £25.7m in top-up payments. These figures are higher than those published for the previous quarter to 30 September. These statistics do not capture the impact of COVID-19 restrictions, including school closures, from January 2021. Statistics for the period January to March 2021 will be published in May 2021.
The TFCS helps support working families with their childcare costs. The scheme provides for a government top-up on parental contributions. For every 80p in the £1 contributed by parents an additional 20p or 20% will be funded by Government up to a maximum total of £10,000 per child per year. This will give parents an annual savings of up to £2,000 per child (and up to £4,000 for disabled children until the age of 17) in childcare costs.
Who Is Eligible
The scheme is open to all qualifying parents including the self-employed and those on a minimum wage. The scheme is also available to parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity and adoption leave. In order to be eligible to use the scheme parents will have to be in work at least 16 hours per week and earn at least the National Minimum Wage or Living Wage. If either parent earns more than £100,000, both parents are unable to use the scheme.
The earnings limit does not apply to newly self-employed who started their business in the last 12 months. In addition, as self-employed income can vary, profits can be averaged across the tax year if it is necessary in order to meet the minimum income requirement.
Source: Informanagement
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