Tax-Free Childcare can save working families up to £2000 per year

Tax-Free Childcare is a UK wide government scheme that can help with up to £2,000 per year for eligible families towards the cost of their childcare.
The average cost of full-time childcare in Northern Ireland is £166 per week and for two thirds of working families it is either their largest or second largest monthly outgoing.

Even though the cost of childcare has dropped slightly in the past year, paying for it still represents a major expense for families. Many working families often spend more on childcare costs than they do on groceries, heating and transport.

The good news is that eligible families in Northern Ireland can use the Tax-Free Childcare Scheme which offers 20% off childcare costs. This means that you can get £2000 per child per year towards the cost for children under 12 years of age. Families with a disabled child who is under 17 can get help of up to £4000 per year.

How does the scheme work?

To use the scheme you need to open a centralised account. For every 80p that you put in, the government will add an additional 20p.

Let’s look at an example.

If your childcare costs were £166 per week that would mean you pay out £664 per month or £8632 per year. With the Tax-Free Childcare Scheme you could potentially save £1,726 per year.

For working families this represents a significant saving.

Who can use the scheme?

The Tax-Free Childcare Scheme is available to all eligible parents in Northern Ireland whether they are single or part of a couple and who are currently in employment or are self-employed. If you have a partner both of you need to be in paid work to avail of the scheme.

Your child has to be 11 years of age or under or if they have a disability then you can use the scheme up until they turn 17. You can’t claim Tax-Free Childcare if you are already in receipt of Universal Credit or Tax Credits.

Furthermore, you and your partner (if you have one) will need to earn at least £131 per week and earn less than £100,000 per year. This weekly amount is equal to 16 hours per week at the national minimum wage for over 25’s.
You are exempt from this minimum income amount if you have been self-employed for less than 12 months.

How to sign up to the scheme

Signing up to the Tax-Free Childcare scheme is straightforward.

You need to register for an account and it takes around 20 minutes to complete the process. You’ll need your (and your partner’s if applicable) National Insurance Number and if you are self-employed you’ll need your Unique Taxpayer Reference (UTR) too.

If you don’t have internet access or need help to sign up for an account you can contact the Childcare Service Helpline on 0300 1234 097 and make an application over the phone.
You can pay money into your account via your debit card or by making a payment from your bank account and the government will credit your account with the top up on the same day. Family or friends can also put money into your account.

Getting advice with Tax-Free Childcare

The Tax-Free Childcare Scheme has potential to save working families up to £2000 per year which can help to considerably ease the burden of childcare costs.

If you want some more information on the Tax-Free Childcare Scheme you can contact our Tax and Benefit Advisers or visit the Childcare Choices website

You can get in touch with an adviser by phone via our Freephone number 0800 988 2377 between 9am - 5pm Monday to Friday.

Alternatively you can email an adviser at tax@adviceni.net.