HMRC urges parents to use Tax-Free Childcare
HMRC is keen to remind families that they can take advantage of the Tax-Free Childcare initiative to help save money. What does it cover and is it worth it?
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HMRC clarifies treatment of averaging relief under MTD IT
HMRC has updated its guidance to explain how averaging relief claims will operate under Making Tax Digital for Income Tax (MTD IT). The clarification addresses concerns about how farmers and creators will claim relief once quarterly reporting becomes mandatory. What has changed?
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Double up on the employment allowance
You’re the sole shareholder of a limited company which employs several members of staff. You’re working on plans to start another business with an ex-colleague. Can both businesses benefit from the full employment allowance (EA)?
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VAT cut for children's holiday activities over summer
The government has announced a temporary reduction in the rate of VAT applying to certain children's holiday activity programmes during the summer holidays. The measure is intended to help families with childcare costs during the school break. What has changed?
A press release titled “£2,000 in government funding available to help with childcare costs” is reminding parents that they can cut their childcare bills using the Tax-Free Childcare scheme. The scheme works by setting up a Tax-Free Childcare account. The government then adds 25% of money paid into this account. This means for every £8 paid into the online account, families will automatically receive an additional £2 in government top-up. There is a limit of £500 every quarter, meaning up to £2,000 per year. The account has to be used to pay for childcare. The scheme is not just for traditional childcare, it can be used for things like holiday clubs, nurseries, childminders and after school clubs. Parents and carers could be eligible for Tax-Free Childcare if they:
- have a child or children aged up to 11. They stop being eligible on 1 September after their 11th birthday. If their child has a disability, they may get up to £4,000 a year until they are 17
- earn, or expect to earn, at least the national minimum wage or living wage for 16 hours a week, on average
- each earn under £100,000 per annum
- do not receive tax credits, Universal Credit or childcare vouchers.
Note that the scheme is the replacement for the old Childcare Voucher scheme. If you still receive childcare vouchers, you will permanently lose your entitlement to them if you change to Tax-Free Childcare, so it's worth making sure you will be better off before doing so.
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