Only a small proportion of families in the UK are claiming tax-free childcare, according to data released in December 2018 by the Government. The Department of Children and Families claimed that a mere 91,000 families took advantage of the scheme, which aims to help working parents. As a teacher, you may feel you earn too much to benefit from this tax break. However, it is for parents who make more than £120 a week and less than £100,000 a year. Only the most senior ranks of teaching would fail to qualify, and even with a spouse’s salary on top, your teacher pay check is going to qualify you for tax relief.
How it works
For every £8 a parent pays into the tax-free childcare account, the government will add £2. This is a 20% payment on money up to £2000 a year, £4000 if your child is disabled.
To be eligible your child needs to be under the age of 12 or 16 for a child with a disability.
You can open an online account for savings, which must be used to cover childcare costs. This childcare could include nurseries, childminders, holiday clubs and even some after-school activities.
The point of the scheme is to support parents in providing children with the best start in life. The Government accept that with only 7% of eligible families applying for the scheme in October 2017, more needs to be done to inform people of the right to claim this tax-free scheme.
The content in this article was correct on 22nd April 2019. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on taxation. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.