Tax-free childcare explained – how to apply for the HMRC scheme and who is eligible

PARENTS trying to save some cash can now apply for tax-free childcare.

The news will be well received by thrifty mums and dad – but who can actually apply?

What is the tax-free childcare?

All working parents with children up to the age of 12 can now apply for the Government's tax-free childcare scheme.

The initiative was announced last April and could save parents £2,000 a year on childcare costs.

It came into play on February 14.

In a statement, HMRC said more than 190,000 parents have successfully applied for the scheme since April 2017.

Liz Truss, Chief Secretary to the Treasury, said: "Tax-free childcare will cut thousands of pounds from childcare bills and is good news for working parents.

"More parents will be able to work if they want to and this demonstrates our commitment to helping families with the cost of living."

Who is eligible?

Working families, including the self-employed, with children under-12 or under-17 if they are disabled, can apply.

You or your partner must be earning the minimum wage or living wage.

This means you must be on £120 for 16 hours a week if you're over 25.

And if you are self-employed the earnings limit doesn't apply if you started the business less than 12 months ago.

You’re not eligible if either you or your partner has a taxable income over £100,000.

Your child must be 11 or under and usually live with you. They stop being eligible on 1 September after their 11th birthday.

Adopted children are eligible, but foster children are not.

How to apply and how does it work?

Simply head to the website and sign up to a childcare account.

For every £8 you pay in, the Government adds an extra £2 up to £2,000 per child – £500 every three months – which can be used to pay your chidlcare provider.

Parents can add to their details to the website and will be emailed when they can apply.

The Treasury added that most parents can expect a response to their application within five working days.

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