Covid-19: temporary changes to tax-free childcare

The government is temporarily relaxing the eligibility criteria for tax-free childcare and 30 hours free childcare to support working parents during the coronavirus pandemic

The changes to the rules affect parents applying for, or already getting, tax-free childcare or 30 hours free childcare. Individuals whose earnings are now below the normal minimum income requirement but would normally expect to meet the income requirement, remain eligible.

HMRC’s guidance includes special arrangements for critical workers who may have missed the 31 March deadline for reconfirmation or application for 30 hours free childcare. Local authorities will be able to extend the validity dates on 30 hours codes for eligible critical worker parents during the summer term.

In addition, critical workers who may have exceeded the maximum income threshold of £100,000 per year because of increased hours as a direct result of coronavirus, will still be eligible for 30 hours and tax-free childcare for the current tax year

For those on furlough, they should apply, or reconfirm if they already have a childcare account, if their wage, and their partner’s wage if they have one, is at least the national minimum wage (NMW) for 16 hours a week.

Parents who are not able to work or are working less are also advised to apply or reconfirm if they are getting sick pay or statutory sick pay (SSP). Time spent on sick pay or SSP will count as working and meeting the minimum income requirement.

They can also apply or reconfirm if they taking unpaid leave to care for others, such as their children, if they expect their income to meet the minimum income requirement (at least the NMW for 16 hours a week) after coronavirus.

The same change applies to parents living with someone who has coronavirus who are required to stay home, and those whose hours have been reduced.

However, anyone who has been made redundant is not eligible to apply or reconfirm a childcare account. If they start employment again and expect to earn above the minimum income requirement they can apply 31 days before starting the new job.

Parents who are self-employed are able to apply or reconfirm if they are continuing to work, and their earnings are either above the minimum earnings requirement, or if below that level they would normally expect to earn above it.

Anyone who was getting tax-free childcare but is now claiming universal credit cannot apply or reconfirm. They can apply for 30 hours free childcare if they meet the revised minimum income requirement or would expect to normally.

Check if you can get Tax-Free Childcare and 30 hours free childcare during coronavirus (Covid-19)

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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