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Being self-employed can mean that your working hours are more flexible than they would be for an employer, but caring for children whilst working for yourself is still exhausting. Even if they’re beyond the age of keeping you awake at night, there’s still the daytime distractions, and the added financial pressure.

Balancing childcare with childcare costs

One such financial consideration is the balance between sourcing reliable childcare so you’re free to generate income, and the cost of childcare itself. These related costs are a necessary evil as self-employed parents need their children to be well looked after while they work.

This, like so many things, hasn’t been helped by COVID, of course. According to Coram Family and Childcare’s 2021 Childcare Survey, childcare providers in almost 40% of the areas it surveyed have hiked up their prices for parents as a direct result of the pandemic.

Thankfully, there is support out there for self-employed people, which aims to help lighten the financial load. In this article, we look at what that relief is, who is eligible, and how it can be accessed.

Can self-employed people claim childcare vouchers?

Unfortunately, self-employed workers cannot claim childcare vouchers, although the childcare vouchers scheme is now closed to all new applicants anyway.

As of 4th October 2018, childcare vouchers are only available to those who were already using the scheme. So, the only way to access this particular resource is if you work for an employer who is willing to continue the scheme for existing beneficiaries. Naturally, this doesn’t include self-employed people.

Help with childcare costs for self-employed people

Fortunately, there are options available to both employees and for self-employed workers:

 
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What is the Tax-Free Childcare Scheme?

The Tax-Free Childcare scheme is a government initiative which tops up the amount you pay into a Tax-Free Childcare account.

How does the Tax-Free Childcare Scheme work?

For every 80p you pay into your childcare account, the government will add a further 20p. Parents who are eligible to use the scheme can claim up to £2,000 per child aged up to 11 years old, every year, though this is limited to £500 per quarter. You can claim a total amount of £10,000 in a year.

Tax-Free Childcare for disabled children

The amount available increases to £4,000 per year for disabled children, who can remain on the scheme until they turn 17. In order to be eligible under these circumstances, the child must receive Disability Living Allowance (DLA), the Personal Independence Payment (PIP), or the Armed Forces Independence Payment (AFIP), and/or be registered fully blind or severely sight impaired.

What can I use my childcare account for?

You can use it towards the cost of:

The childcare provider must be registered with the Tax-Free Childcare scheme.

 
Providers must also be recognised by a regulator, such as the Childcare Register or Ofsted. If you’re unsure if your childcare is applicable, a comprehensive list of registered providers can be found online.

Who is eligible for Tax-Free Childcare?

The great news is that the Tax-Free Childcare scheme is available to both PAYE employees and to self-employed workers.

The even betters news is that the requirement to meet the £120 per week earning threshold is waived if you’re newly self-employed. This applies to those who are still in the startup phase of self-employment, so those who started their business less than 12 months ago don’t need to meet the threshold.

In order to apply to be part of the Tax-Free Childcare scheme, you need to meet certain criteria. If it’s something you’re considering, here’s the checklist you’ll need:

Am I eligible for the tax-free childcare scheme?

Reconfirm your details every three months

Once you join the Tax-Free Childcare scheme, you’ll need to reconfirm your details four times per year (every three months), by signing into your online childcare account. You’ll need to cover the full cost of any outstanding childcare payments yourself if you miss the confirmation deadline.

Once you set up your online account, you’ll be sent regular automated reminders about upcoming deadlines to keep everything in check.

Can other people pay into my Tax-Free Childcare account?

Although only one person can open a Tax-Free Childcare account in relation to the child, other people are allowed to pay into it. If there are other people who want to contribute financially to your child’s childcare costs, they can do so by transferring money into the account via standing order or bank transfer.

How long does it take for the government contribution to appear in my childcare account?

Your portion of the costs can be paid into your Tax-Free Childcare online account via bank transfer or standing order. Normally, the government contribution will appear in your account on the same day.

How to apply for Tax-Free Childcare

You’ll be glad to know that getting yourself set up on the Tax-Free Childcare scheme is super simple. All being well, the application process should take no more than 20 minutes out of your day.

First, you’ll need to set up a Government Gateway account if you don’t have one already. Once you have your gateway account, you can apply for Tax-Free Childcare online.

The process also includes a stage to help you determine whether or not you will be better off receiving Tax-Free Childcare relief, or sticking with your existing channel of support. This is worth doing before making any rash changes or decisions.

Here’s what you’ll need to hand during the application process:

If successful, your account will usually be set up within seven days but often, much sooner than that.
 
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What if I’m claiming other financial support?

Tax-Free Childcare can’t be claimed in conjunction with Working Tax Credit, Child Tax Credit or Universal Credit. If you are receiving any of these and successfully apply to the Tax-Free Childcare scheme, all credit will be stopped.

For this reason, it’s important to work out which avenue of support is going to be of most benefit to you before filling out any applications or making any changes to your current situation.

To help you do this, the government has an online tool to help you choose childcare support options according to your eligibility.

Free childcare for 3 and 4 year olds

As well as claiming Tax-Free Childcare, you may be able to get free childcare if your child is aged 3 to 4. The number of hours of free childcare you can get, and the eligibility criteria, depends on where you live:



Find out more about our online accounting services for self-employed people and businesses! Call 020 3355 4047 to chat to the team, or grab an instant quote.

About The Author

Elizabeth Hughes

A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible.

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