School summer holidays are around the 25th of July around the country and many parents will be eagerly planning activities for their children.
Tax-free childcare accounts were promised in 2015, launched in 2017 and became widely available from 2018 and offer parents a tax-free way to pay for the costs of childcare.
The summer holidays are not far away now so the government is reminding parents that by opening the government run childcare account and making childcare deposits, parents can get basic rate tax relief on up to £8,000 of contributed costs per child, per year.
Tax relief provided is capped at £2,000 per child per year, or up to £4,000 for children with disabilities.
Essentially for every £8 deposited, the government tops up the balance with an extra £2. The account can then be used at over 68,000 childcare providers around the UK, including schools and summer camps, but also extending to before school and after school care.
In fact, the childcare account can be used to pay for nannies, nurseries, holiday clubs and more - and the government is urging registered childcare providers to sign up to the scheme if they are not already.
Children under the age of 12 are eligible (or under 17 if disabled), parents can be employed or self-employed, and have to be earning above minimum wage but below £100,000 overall annual income.
Parents are urged to open their accounts via the childcare service online - visit ChildcareChoices.gov.uk. The catch is that even though top ups are provided instantly by the government, they are limited to £500 (£1,000 if disabled) per quarter for each child. So, if a parent was to contribute £5,000 into a childcare account, the instant top up would be capped to £500 with the remainder added in the next quarter - these figures can be doubled if the child is disabled. The other catch is parents must make sure they sign in to their online account at least once per quarter otherwise top-ups are halted.