Nannies and Tax-Free Childcare

What is Tax-Free Childcare?

Tax-Free Childcare is a new government scheme, which will be available to around two million working families to help with their childcare costs.

From early 2017, working parents with children under 12 (under 17 for disabled children) can set up an online childcare account to pay their nanny or other childcare providers. For every £8 parents pay in, the government will add £2, up to a maximum contribution of £2,000 per child, per year (£4,000 per year for disabled children).

To be eligible for Tax-Free Childcare both parents must be working in a two-parent household, or the single parent in a single-parent household, and each must be earning at least £115 a week and no more than £100,000 each a year.

Nannies

Many parents will want to pay their nanny through Tax-Free Childcare, and to receive payments via the scheme you must be registered with a childcare regulator such as Ofsted. This process can sometimes take 12 weeks or more, so take action now to ensure you’re ready.

Once you have registered with Ofsted you will receive a letter from HMRC inviting you to sign up for Tax-Free Childcare with instructions on how to do so.

See here for more information on registering with Ofsted.