Yahoo Finance Tax-free childcare scheme for parents with children up to 12 finally rolls out
The Government is finally rolling out its Tax-Free Childcare scheme for older children but experts warn that ongoing technical issues with the dedicated website have yet to be sorted out.
The scheme, which offers parents up to £2,000 a year per child, was launched in April last year and was initially open to parents of children under four, or under 17 if the child is disabled.
Working parents can open open an online account on the dedicated Childcare Service website. For every £8 paid in, the Government adds £2 up to £2,000 a year per child, or £4,000 for disabled children. This can only then be used to pay for registered childminders, nurseries, nannies and after school clubs.
The scheme was supposed to have been made available to under 12s by the end of the year but massive issues with the website have been blamed for the delay.
Thousands of parents have also been prevented from applying for the childcare they are entitled to.
Nicky Morgan MP, who chairs the Treasury Select Committee, wrote to HMRC in July regarding the technical failings and HMRC introduced a “compensation” scheme in August.
At the end of last month it was revealed that HMRC had paid £966,666 to parents who should have received Tax-Free Childcare payments but didn't, and another £38,949 in compensation for "inconvenience and expenses" such as telephone calls to the helpline.
HMRC has also received 3,496 complaints from parents experiencing problems with the website.
Neil Leitch, chief executive of the Pre-school Learning Alliance, an educational charity, said he remains concerned that "technical issues that have plagued the scheme for months have yet to be adequately addressed".
He said the charity was still receiving regular reports of parents struggling to access or use their online childcare accounts which he said "simply isn't acceptable."
"The Government must address this as a matter of urgency and ensure that the system underpinning two of its flagship childcare scheme is actually fit for purpose," he added.
Months of childcare chaos
During the summer parents were also facing challenges related to the launch of the Government's flagship 30-hours free childcare scheme in September.
Charities argued the scheme had not been properly funded and squeezed providers were being forced to charge for meals, nappies and trips, previously offered free of charge, to make ends meet. Some have also had to raise prices for non-funded childcare and for older children.
Many nurseries were left with little option but to shut. The Telegraph reported multiple nursery closures across the country in July because the rate the Government offers is 39p an hour below the actual cost of childcare.
Temi Kamson told Telegraph Money she had to split her 30 free hours between two nurseries for her three-year-old son Daniel because his existing nursery could not afford to offer the full scheme.
Ms Kamson, 33, said the nursery could only offer the free hours if parents committed to 35 hours a week of childcare all year round. The five extra hours would have to be paid for.
Who can get Tax-Free Childcare?
Working parents with children under 12 can apply for Tax-Free Childcare.
Both parents (if they are together) must be working 16 hours a week and paid at least the national living wage of £7.20 an hour, the equivalent to £120 a week.
If either parent earns more than £100,000, both parents are disqualified.
Those on maternity, paternity or adoption leave could still be eligible, as are those who are unable to work because they are disabled or are carers.
Tax-Free Childcare cannot be used at the same time as childcare vouchers, Universal Credit or tax credits. However it can be used in line with the 15 hours and 30 hours free childcare schemes.
Tax-free childcare will eventually replace childcare vouchers, although there are significant differences.
Childcare vouchers offer savings per parent, whereas with tax-free childcare, the savings are made per child. The vouchers are only available through employers - and not all offer the scheme.
In a written statement Mel Stride, the financial secretary to the Treasury, acknowledged there were problems with the childcare services website over the summer including "delayed decisions about eligibility". He admitted that parents didn't receive the "intended level of service".
He said Tax-Free Childcare will "gradually" be opened up to parents of older children over the coming months whilst further improvements are made to the online system.
Mr Stride said this means the Government can "manage the volume of applications going through the service, so parents continue to receive a better experience and prompt eligibility responses when they apply."
HMRC said it made "significant improvements" to the childcare service after some parents experienced issues.
It said it will continue to implement technical updates to "further improve the customer experience.”
