What does tax-free childcare actually mean?

The new scheme, which will come into force next month for the youngest children, will mean that the Government will pay 20 per cent of annual childcare costs (for every 80p you pay in the Government will pay 20p – ie the basic tax rate) if you are eligible.

Who is eligible?

The scheme is available to parent/s of children up to 12 years of age (for children with disabilities this is increased to 17). In order to qualify, the parent or parents have to be working a minimum of 16 hours a week and earning at least £115 a week. If either parent earns more than £100,000 a year they won’t qualify. If you’re already on any employer childcare voucher scheme, you wont’t be able to apply for both (you can choose one or the other). It’s good news for the self-employed as they too can apply. The scheme is also available to those on paid or unpaid maternity, paternity or adoption leave. The scheme is only available in England. In the USA kids can attend children’s academy for preschoolers that is quite affordable. Hopefully, there will be similar institutions in England soon. By the way, those who live in Highlands Ranch, CO, USA, contact OVCA for details.

What do you need to do?

Firstly, if eligible, you’d have to open an online account through NS&I and this will be via the Government website. Exact details seem to be a bit vague at present and there don’t appear to be any links just yet.

Once open, you pay whatever you want into this account up to a maximum of £8,000 and this is topped up by the government. If you paid in the full £8k, this would entitle you to the maximum government contribution of £2,000 (for disabled children it’d be £4000). You can open one account per child, with the £8000 cap for each. You don’t have to pay in a set amount each month, so you can pay in more for the times that you need to pay for more childcare. The even better news… anyone can pay into the account, so get the relatives on the case

• Savings Accounts for Children

The post Childcare That’s Tax-free – Budget 2017 appeared first on The Parent Social.

Personal Savings Allowance

From April 6th 2016, basic rate taxpayers (those with taxable income of between £17,000 and £43,000 a year) will be able to earn up to £1,000 in savings income tax free. Savings income means interest from banks and building society accounts, credit unions and National Savings and Investments. This is called the Personal Savings Allowance (PSA). Those earning between £43,001 and £150,000 will still have a Personal Savings Allowance of £500 per year.

ISAs and Savings Accounts

ISAs (Individual Savings Accounts) are tax-efficient savings vehicles. The allowance for the 2015/2016 tax year is £15,240 and this total can be invested in a cash ISA, Investment ISA or a combo of the two. This means you can invest up to this amount without paying a penny of tax on your interest. Great right? Well kind of. The best rate on an easy access cash ISA at the moment is 1.45%. That’s pretty rubbish.

I have a cash ISA but was so disappointed by the plummeting interest rate that I looked for something else. I found the Santander 1-2-3 account to be brilliant. It’s not actually a savings account, it’s a current account (so money is not locked in), but it pays 3% on balances over £3000 (just the sort of sum you might have earmarked for an ISA). There’s a £5 monthly account fee, but this can be offset by the cash back that the account gives you on many household bills. I really love it and it’s doing a lot more than my ISA. However, I, like other basic rate tax payers, am currently paying 20p in every pound on any interest I make.

Children and Saving

I’m trying to get my children into the saving habit. We’re currently doing the 365-day penny challenge, which you can read all about on my blog for Habyts.

Further information can be found at GOV.UK

Savings accounts for children

The post Personal Savings Allowance: Good News Savers! appeared first on The Parent Social.