Childcare top-up to cover summer activities

Childcare top-up to cover summer activities. Image Credit: AdobeStock

Reminder for working families: Childcare top-up to cover summer activities

(Partner Content) As the school holidays fast approach, many parents face having to organise extra school holiday childcare.

Childcare top-up to cover summer activities

Childcare top-up to cover summer activities. Image Credit: AdobeStock

HMRC is reminding working families that the Tax-Free Childcare (TFC) scheme can help if you have children aged up to 11 years old (17 for those with certain disabilities).

The TFC scheme helps support working families with their childcare costs and can be used to pay for accredited holiday clubs, childminders, or sports activities during the school holidays. There are many registered childcare providers including school, football, art, and tennis clubs signed up across the UK. Parents can pay into their account regularly and save up their TFC allowance to use during school holidays. 

Government top-up on parental contributions for childcare

The TFC scheme provides for a government top-up on parental contributions. For every £8 contributed by parents an additional £2 top-up payment will be funded by the government up to a maximum total of £10 000 per child per year. This will give parents an annual savings of up to £2 000 per child (and up to £4 000 for disabled children until the age of 17) in childcare costs. 

The TFC scheme is open to all qualifying parents including the self-employed and those on a minimum wage. The scheme is also available to parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity, and adoption leave. To be eligible to use the scheme parents will have to be in work at least 16 hours per week and earn at least the National Minimum Wage or Living Wage. If either parent earns more than £100 000, both parents are unable to use the scheme.

HMRC’s Director General for Customer Services, said:

“We want to help kids stay active this summer, whether they are going to summer holiday clubs or a childminder. A childcare top-up will go a long way towards helping parents plan and pay for summer activities to keep their kids happy and healthy.”

Agent update

HMRC has released the latest bi-monthly issue of the ‘Agent Update’ publication which includes summaries of recent changes and updates that have been announced. HMRC has also confirmed that going forward the agent update will now be published monthly.

The document which is aimed at taxation and accountancy practitioners includes links to more detailed information on each of the topics covered. 

The topics covered in the latest edition include the following:

  • COVID-19. A reminder that the GOV.UK portal includes details of all the various financial support and other measures available to employers, businesses and employees.
  • Coronavirus Job Retention Scheme (CJRS). The deadline for CJRS claims for periods in June is Wednesday 14 July 2021. Until the end of June, employers can claim 80% of an eligible employee’s salary for hours not worked with the usual £2,500 monthly cap. Employers continue to have to cover employers’ employees’ NIC and pension costs for the hours the employee does not work. From 1 July, government support will be reduced to 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50 and then to 60% in August and September.
  • Agent Dedicated Line (ADL). HMRC has confirmed that the ADL that offers priority access to HMRC staff has been relaunched on a trial basis from 14 June 2021 with a target for calls to be answered within 10 minutes. HMRC has also made it clear that the ADL is not expected to be used to handle certain types of calls where digital services are available or where the required information can be obtained directly from clients. 
  • Postponed VAT accounting. Since 1 January 2021, businesses registered for VAT can account for import VAT on their VAT return. This is known as postponed VAT accounting. For most businesses, this means that they declare and recover import VAT on the same VAT return. Postponed VAT accounting is available permanently and HMRC expects most businesses to use it because it provides significant cash flow benefits compared to the alternative of paying the import VAT when the goods are imported. The normal VAT recovery rules about what VAT can be reclaimed as input tax apply. 
  • Off-payroll working rules – IR35. Since 6 April 2021, all medium and large-sized clients will be responsible for deciding the employment status of workers. The changes mainly apply to businesses with an annual turnover of more than £10.2 million (known as the simplified test).
  • Links to new HMRC publications including Revenue & Customs Briefs.