Being self-employed can mean that your working hours are more flexible than they would be for an employer, but caring for children whilst working for yourself is exhausting. Even if they’re beyond the age of keeping you awake at night, there’s still the daytime distractions and the added financial pressure.

Thankfully, there is support out there for self-employed people, which aims to help lighten the financial load. In this article, we look at what that relief is, who is eligible, and how it can be accessed. You might also be interested in our article about Child Benefit for self-employed people.

Can self-employed people claim childcare vouchers?

Unfortunately, self-employed workers cannot claim childcare vouchers, although the childcare vouchers scheme is now closed to all new applicants anyway.

As of 4th October 2018, childcare vouchers are only available to those already using the scheme, so the only way to access it is if you work for an employer willing to continue the scheme for existing beneficiaries. Naturally, this doesn’t include self-employed people.

Fortunately, there are other options available to both employees and self-employed workers:

• The Tax-Free Childcare scheme
• Free childcare up to a certain number of hours, depending on where you live

What is the Tax-Free Childcare Scheme?

The Tax-Free Childcare scheme is a government initiative which tops up the amount you pay into a Tax-Free Childcare account.

How does the Tax-Free Childcare Scheme work?

For every £8 you pay into your childcare account, the government will add a further £2. Parents who are eligible to use the scheme can claim up to £2,000 per child aged up to 11 years old, per year (though this is limited to £500 every 3 months). You can claim a total amount of £10,000 in a year.

Tax-Free Childcare for disabled children

The amount available increases to £4,000 per year for disabled children, who can remain on the scheme until they turn 17. In order to be eligible under these circumstances, the child must receive Disability Living Allowance (DLA), the Personal Independence Payment (PIP), or the Armed Forces Independence Payment (AFIP), and/or be registered fully blind or severely sight impaired.

What can I use my childcare account for?

You can use it towards the cost of:

• School clubs (breakfast clubs, after school clubs, weekend clubs, etc)
• Nurseries
• Playgroups
• Childminders and nannies
• Some school holiday activities (e.g. summer camps)

 
Providers must also be recognised by a regulator, such as the Childcare Register or Ofsted. If you’re unsure if your childcare is applicable, a comprehensive list of registered providers can be found online.

Who is eligible for Tax-Free Childcare?

The great news is that the Tax-Free Childcare scheme is available to both PAYE employees and to self-employed workers.

The even betters news is that the requirement to meet the minimum earning threshold is waived if you’re newly self-employed. This applies to those who are still in the startup phase of self-employment, so those who started their business less than 12 months ago don’t need to meet the threshold.

In order to apply to be part of the Tax-Free Childcare scheme, you need to meet certain criteria. If it’s something you’re considering, here’s the checklist you’ll need:

• You must be in work (or self-employment) and/or be on parental leave, sick leave, or annual leave
• Your child (or children if applying for more than one) must be 11 years old, or younger
• Your child or children must live with you for the majority of the time
• You must be earning the National Minimum Wage, for a minimum of 16 hours per week

Reconfirm your details every three months

Once you join the Tax-Free Childcare scheme, you’ll need to reconfirm your details four times per year (every three months), by signing into your online childcare account. You’ll need to cover the full cost of any outstanding childcare payments yourself if you miss the confirmation deadline.

Once you set up your online account, you’ll be sent regular automated reminders about upcoming deadlines to keep everything in check.

Can other people pay into my Tax-Free Childcare account?

Although only one person can open a Tax-Free Childcare account in relation to the child, other people are allowed to pay into it. If there are other people who want to contribute financially to your child’s childcare costs, they can do so by transferring money into the account via standing order or bank transfer.

How long does it take for the government contribution to appear in my childcare account?

Your portion of the costs can be paid into your Tax-Free Childcare online account via bank transfer or standing order. Normally, the government contribution will appear in your account on the same day.

How to apply for Tax-Free Childcare

You’ll be glad to know that getting yourself set up on the Tax-Free Childcare scheme is super simple. All being well, the application process should take no more than 20 minutes out of your day.

First, you’ll need to set up a Government Gateway account if you don’t have one already. Once you have your gateway account, you can apply for Tax-Free Childcare online.

The process also includes a stage to help you determine whether or not you will be better off receiving Tax-Free Childcare relief, or sticking with your existing channel of support. This is worth doing before making any rash changes or decisions.

Here’s what you’ll need to hand during the application process:

• Your UK passport details
• Tax credit information
• P60 and/or recent payslip (if applicable)
• National Insurance (NI) number
• Unique Taxpayer Reference (UTR) number

If successful, your account will usually be set up within seven days but often, much sooner than that.
 

What if I’m claiming other financial support?

Tax-Free Childcare can’t be claimed in conjunction with Working Tax Credit, Child Tax Credit or Universal Credit. If you are receiving any of these and successfully apply to the Tax-Free Childcare scheme, all credit will be stopped.

For this reason, it’s important to work out which avenue of support is going to be of most benefit to you before filling out any applications or making any changes to your current situation.

To help you do this, the government has an online tool to help you choose childcare support options according to your eligibility.

Free childcare for 3 and 4 year olds

As well as claiming Tax-Free Childcare, you may be able to get free childcare if your child is aged 3 to 4. The number of hours of free childcare you can get, and the eligibility criteria, depends on where you live:

• England: 30 hours per week, for 38 term-time weeks in a year. Learn more.
• Wales: 30 hours per week, with a minimum 10 hours of early education a week, and a maximum 20 hours of childcare each week. Learn more.
• Scotland: Up to 1,140 hours of funding for early learning and childcare a year. Learn more.
• Northern Ireland: The Pre-School Education Programme provides education funding for children in the year before they start primary school. Learn more.

 
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