The coronavirus (COVID-19) crisis has dramatically changed lifestyles for Britons. Recently, lockdown measures have changed in different ways across the UK, such as some people in England now able to return to work.
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The pandemic has no doubt had a significant impact for families, with many parents struggling to balance the care of their children, their education, as well as their own work commitments in the home environment.
Amid the coronavirus crisis, the government has made a number of changes to Tax-Free Childcare Accounts.
Tax-Free Childcare Accounts enable eligible parents to save up to £8,000 per year per child and to receive a taxpayer funded 20 percent top up on their savings.
This means that every £8 saved would become worth £10, and this is in addition to the 30 hours of free childcare for three to four-year-olds.
Kay Ingram, Director of Public Policy at national financial planning group LEBC said: “The temporary changes made to the scheme by Government recognise the difficulties caused for parents trying to juggle childcare with work when normal patterns of work and school have been disrupted by the COVID-19 emergency.
“At up to £2,000 per child this scheme should help more parents cope with the cost of childcare.
“Those unsure how to fund childcare if their income has been disrupted may benefit from financial advice.”
The Account can fund childcare with registered providers, which can include nurseries, childminders, nannies, after school clubs and holiday schemes.
Recognising the additional disruption caused by COVID-19 to working lives and incomes, the Government has introduced three temporary changes to the rules.
These changes will help existing claimants and new applicants to remain eligible for this taxpayer subsidy and 30 hours free care for three to four-year- olds, as Ms Ingram explained.
They relate to the minimum and maximum parental earnings and the requirement to reconfirm eligibility on a quarterly basis, and Ms Ingram, a chartered financial planner, has detailed what this means for parents.
Minimum earnings requirement
“To be eligible both parents, or partners of parents, must be in work and each typically earning £139.52 or more per week; self- employed individuals also qualify if their average profits are above these figures,” she said.
“As a temporary measure, during the COVID-19 crisis, the minimum earnings requirement for the subsidy and the 30 hours of free childcare for 3-4-year olds has been eased till 31 August.
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“To qualify for this relaxation the parents must be on furlough, working reduced hours or unable to earn their usual profits as a self- employed person due to Covid 19 restrictions interrupting their work and they must normally expect to work and earn at or above the minimum required. Those not in work due to sickness or disability or parental leave qualify for these subsidies.
“Parents who are not in work or have been made redundant are not eligible for either of these benefits.
“If claiming some working age tax credits or Universal Credit they may be better off to claim support for childcare through these schemes which can provide up to 85 percent of the cost of childcare in certain circumstances.”
Income Below £100,000
“Where one parent, or a partner of a parent, has income more than £100,000 they do not qualify.
“This rule too has been relaxed for critical workers whose income exceeds £100,000 in the 20/21 tax year due to working extra hours as a direct result of the Covid 19 emergency,” explained Ms Ingram.
“Eligibility for these schemes must be reconfirmed every quarter and the top up payments are also paid on a quarterly basis at up to £500 per quarter. Some parents who may have missed the March 31 deadline for the first quarter but may still reconfirm or apply for their Childcare account where the deadline was missed due to the COVID-19 emergency.
“Each child qualifies for this subsidy, so the larger the family, the larger the total benefit. Children in receipt of disability living allowance or personal independence payments qualify for a subsidy of up to £4,000 per annum.
“Eligible parents should check their care provider is officially approved before opening an Account and can then start saving via the Government website.
“Only one parent may claim the childcare account so parents who are separated or divorced must agree who will claim or this may be decided by the court. Adopted children are eligible, but not foster children.”
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