Tax-free childcare: critical workers

The maximum income threshold for the tax-free childcare scheme will temporarily be increased to £150,000 (from £100,000) for critical workers for tax year 2020/21 only. The Childcare Payments (Coronavirus and Miscellaneous Amendments) Regulations, SI 2020/656, will make the change to ensure that critical workers whose income exceeds the normal threshold for reasons related to coronavirus can continue to claim.

The regulations are drafted narrowly to make clear that this adjustment is intended for critical workers whose increased income is ‘mainly attributable to earnings from work undertaken directly or indirectly as a result of the incidence or transmission of coronavirus’. For these purposes the definition of ‘critical worker’ is aligned with the Department for Education list of those parents whose children were able to access schools after ‘lockdown’ on 23 March.

The regulations also amend the rules on childcare accounts, from 21 July 2020, to allow permitted payments from accounts to include payments to intermediaries for the purpose of paying a childcare provider.