Can I Get Tax Free Childcare If I’m Self-employed?

Tax free childcare might be something that you’re concerned about if you’re self-employed. Child-care is imperative for many of us in full-time jobs and support can be a big help. So, if you’re wondering ‘what is tax free childcare and how does it work?’ and want to know if you’re eligible, we’ve got a guide below. Take a look.

What is tax free childcare and how does it work?

Tax-free childcare is a Government scheme is designed to help with the cost of childcare – including nurseries, childminders and other wraparound care. You could be eligible for tax free childcare and get up to £2000 a year per child.

The tax-free childcare scheme works by the Government adding 20p for every 80p you put in to your tax-free childcare account. We have more details on this below.

Can I get tax free childcare? – A guide for self-employed people

You are eligible for tax free childcare if you’re self-employed – but it does depend on whether you’re single or in a partnership. Single people will qualify for this scheme if they’re in work, however if you’re in a partnership, both of you will need to in work to be eligible.

It’s important to note that your partner does not have to be the child’s parent. If your partner lives with you and don’t meet the threshold, you might not be eligible.

How much do I need to earn to be eligible for tax free childcare?

To be eligible for tax free childcare, you (and your partner) will need to either earn at least minimum wage. You will need to earn a certain amount over a 3 months period. Specifically, these will be:

  • £1,976 if you’re aged 23 or over
  • £1,909 if you’re aged 21 or 22
  • £1,420 if you’re aged 18 to 20
  • £1,000 if you’re under 18 or an apprentice

For self-employed people who do not expect to earn this month over the next 3 months, use an average of what you expect to earn over the current tax year. Similarly, if you started your business less than 12 months ago, you can earn less and still be eligible for the scheme.

If you earn £100,000 or over (for those in partnerships, this is a combined wage), you might not be eligible for this scheme. However, if you happen to pay any self-employed tax-deductible expenses, (i.e., pensions or any tax reliefs) you could be below the threshold.

If you’re on self-employed sick leave, annual leave, parental leave, or your partner is unable to work and receives some benefits, you could still be eligible for self-employed tax-free childcare.

How much self-employed tax-free childcare do I get?

If you’re eligible for self-employed tax-free childcare, you can get a maximum of £500 every 3 months (i.e., £2000 a year), as long as you reapply and are still eligible. For children with disabilities, this increases to a maximum of £1000 every 3 months, or £4000 a year.

How to sign up for the tax-free childcare scheme

You can easily sign up for the Government tax-free childcare scheme through the official website. To sign up, you’ll need:

  • Your national insurance number
  • A taxpayer reference, as you’re self-employed

You must reconfirm your eligibility for tax-free childcare every three months (four times a year) or you could miss out on your scheme.

How to pay your share

You can either make a payment directly from your bank to the childcare account or create a standing order. You cannot set up a direct debit with this scheme.

When does the state put their share in?

The top-up from the government should appear the same day.

When can I pay the childcare provider?

As soon as your account shows ‘available funds’ you can make a payment. Payments made before 2:30pm should arrive the same day; after this, on a weekend, or a public holiday means that it could take up to 3 days to arrive. It’s a good idea to plan ahead so you can make the payments to your provider on time.

What can I use my self-employed tax-free childcare on?

There are many costs that the tax-free childcare scheme can help you with. Such as:

  • Nurseries
  • Nannies
  • Breakfast clubs and after school clubs
  • Au-pairs
  • Childminders
  • Playgroups

However, your provider must be registered with the Tax-Free Childcare scheme. This is along with being registered with a regulator such as the Childcare Register, Ofsted, or the Early Years Register. Checking the childcare provider is registered before opening your account is ideal.

Some holiday activities are also included with this – from sports activities to more creative events, check the providers on your account.

What age does the tax-free childcare scheme stop?

Your child must be 11 years old or younger in order to qualify for this scheme. After this, the scheme ends on the September after they turn 11. This is different for children with disabilities – in this case, you’re eligible for the tax-free childcare scheme until they’re 16.

We hope this article on self-employed help with childcare costs was helpful. Next, check out our guide to maternity leave if you’re self-employed.