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The Independent Automotive Aftermarket Federation

Summer tax incentive for parents


Date: 09-Aug-2019

Our colleagues at Xecutive Search have drawn our attention to the fact that HMRC is reminding parents and employers of the benefits of Tax-Free Childcare (TFC), especially over the school summer holidays. Might your employees be missing out on a government freebie?

The holiday season is here and with this in mind HMRC has begun a campaign to remind parents of the tax break for childcare. In its latest Employer Bulletin, it asks employers to help by publicising Tax-Free Childcare (TFC) accounts to their workers, many of whom will be asking for time off to look after their youngsters in the school holidays.

In an unusual display of benevolence, HMRC says that it’s raising awareness of the tax break because its research shows that it’s being underused, particularly for ad-hoc childcare.

TFC accounts aren’t only for regular childcare costs. They can also be used to pay for after-school care and to help over the school summer holidays, for example. As an employer this can be good news for you, it might help prevent you from being short staffed in school breaks as fewer employees will need to take time off at the same time.

However, HMRC’s reminder, while helpful, neglects to mention that if you provide a subsidy or vouchers for childcare to employees as a perk they aren’t allowed to have a TFC account.

TFC is available to working parents with children up to eleven years old. When you pay into a TFC account the government will add a tax-free incentive equal to 25% of what you put in, up to a maximum of £2,000 per child per year. The money from the account can be used to pay for approved childminders, nurseries and nannies.

The government pays a 25% tax-free incentive to help towards childcare costs, including those for summer camps and supervised school holiday activities, etc.

A TFC account can be opened online: https://www.gov.uk/get-tax-free-childcare

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