Tax-free 
childcare scheme (TFC) during Covid-19

You may now be eligible for the tax-free Childcare (TFC) scheme thanks to Covid-19.

The government has brought in temporary changes to its TFC scheme, potentially giving more people access to 30 hours free childcare.

The basic requirement for eligibility are:

  • You must expect to earn at least the equivalent of the National Minimum Wage or living wage over the next 3 months. This equates to £1,813.76for an over 25 year old.
  • If you have a spouse or partner they need to earn this as well.
  • If you are newly self employed and your earnings are not at this level yet don’t worry you can use your expected year’s earnings instead.

There is an upper income limit too. If you or your spouse / partner have ‘adjusted income’ in excess of £100,000 in this tax year, you will not qualify. Adjusted income is your total income before you deduct your personal tax allowance or take off things like gift aid.

So who could benefit from these temporary changes?

  • Those furloughed
  • Those not able to work as much as possible
  • The self-employed
  • If you are working more than normal because of Covid-19 and
  • Critical Workers

For those who have been furloughed, if your current income does not qualify you for TFC, your normal income would still apply.

What about if you have needed to take unpaid leave to care for your children or someone with COVOD-19? You too can apply if your normal post COVID-19 income meets the income requirements.

If you are self-employed and still working, or not able to get work because of COVID-19, you can apply for TFC and use your expected income in the current tax year, if within the qualifying boundaries.

One of the best developments is that Critical workers, who have earned more than the usual £100,000 limit because they have had to work more because of COVID-19, are now eligible. Additionally, any Critical worker who missed the 31 March reconfirmation or application deadline can still apply.

COVID-19 has taken away lots of our parental choices but at least a greater number of people will qualify for some Government assistance with the cost.

Nigel Farrar
nigel@legalandmedical.co.uk
01392 832696
The information contained in this article is does not constitute financial advice. This information is based on our current understanding of legislation. Legislation and tax treatment can change in the future.

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