Tax-free childcare scheme comes into force

Implementation date: 21 April 2017

The Spending review and autumn statement 2015 confirmed that in families where both parents work and each parent earns less than £100,000 per year, and a minimum weekly income equivalent to 16 hours at the rate of the national living wage, the Government will pay 20% of their yearly childcare costs (up to £2,000 for each child, or £4,000 if the child is disabled). The Childcare Payments Act 2014 introduces the new tax-free childcare scheme, and is commenced in part by the Childcare Payments Act 2014 (Commencement No.3 and Transitional Provisions) Regulations 2017 (SI 2017/578). The Childcare Payments (Eligibility) Regulations 2015 (SI 2015/448), the Childcare Payments (Eligibility) (Amendment) Regulations 2016 (SI 2016/793), the Childcare Payments Regulations 2015 (SI 2015/522) and the Childcare Payments (Amendment) Regulations 2016 (SI 2016/796) set out the detailed rules of the scheme. The scheme applies to parents with children under 12 (or under 17 if the child is disabled).

The scheme will operate through online accounts and no involvement of employers is required. It launches on 21 April 2017 and is rolled out over 2017, with parents of the youngest children qualifying first.