Childcare providers – have you registered to receive payments from parents who use Tax-Free Childcare?

What is Tax-Free Childcare?

Tax-Free Childcare is an important form of childcare support that can assist eligible parents with their childcare costs. The scheme has replaced Childcare Vouchers for new claimants, and allows eligible families to save 20% of their childcare costs, up to a maximum of £2,000 per year, per child (up to £4,000 for a child with a disability).

To use Tax-Free Childcare, a parent must set up an account for each child. They pay into the account and the Government adds a ‘top up’ amount. This account can then be used to pay for registered childcare.

How can childcare providers sign up to receive payments from parents?

In order for a childcare provider to be able to accept payments made using a Tax-Free Childcare account, the provider must sign up with HMRC. This is separate and in addition to your official registration as a childcare provider. In signing up with HMRC you will receive a childcare provider account, linked to your bank details, that enables you to receive payments from parents using Tax-Free Childcare.

Many providers have already signed up to accept payments through Tax-Free Childcare accounts. If you have not yet done so the process is:

  1. Phone the Childcare Service helpline on 0300 123 4097 and request a letter to get a childcare provider account to receive payments from parents using Tax-Free Childcare.
  2. You will receive a letter with an 11-digit user ID.
  3. Go to the Government website and follow the directions to sign up using your:
    1. 11-digit user ID
    2. Bank details
    3. Business postcode (the one registered with your regulator, for example Ofsted in England or your Health and Social Care Trust in Northern Ireland).

After signing up to Tax-Free Childcare you can still accept payments from parents using Childcare Vouchers and other methods.

Talk to an advisor

Employers For Childcare is here to help, so if you have any questions about the process or about Tax-Free Childcare in general, please contact the Family Benefits Advice Service on 028 9267 8200.

We can also provide a free, online advice session for the parents using your service explaining the different forms of financial support they may be entitled to, helping them to identify the best form of support for their circumstances so please feel free to share our details with parents and signpost them to our service.