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Tax-Free Childcare, faster payments and changes to reference numbers

Parents can use Tax-Free Childcare to pay for:

  • pre-schools, day nurseries and out-of-school care
  • registered childminders
  • school based care (that is paid for, such as after-school and holiday clubs)

The article summarises some changes HMRC are making to improve the childcare service.

 

Provider payment changes

 

HMRC have confirmed it’s now quicker for parents to make Tax-Free Childcare payments to providers, now taking less than 24 hours. For example;

 

If a parent makes their initial deposit by bank transfer:

  • it will normally take 2 hours for the payment to reach their childcare account
  • HMRC will add any government ‘top up’ automatically
  • they can use the money to pay their provider as soon as it shows as ‘available funds’  

If a parent makes their initial deposit by bank transfer:

  • it will normally take 2 hours for the payment to reach their childcare account
  • HMRC will add any government ‘top up’ automatically
  • they can use the money to pay their provider as soon as it shows as ‘available funds’ 

If a parent makes a payment to their provider:

  • before 2:30pm it will reach the provider’s account the same day
  • after 2:30pm or at the weekend or bank holiday, it will arrive in their provider’s account the next working day

Payments over £2,000 will take up to 3 working days to reach the provider’s BACs account.

 

Payment reference numbers

HMRC have also advised changes to the payment reference number. Transactions will now appear on the provider’s bank statement as ‘National Savings A’. 

 

HMRC are working with the National Savings and Investment (NS&I) to make it easier to identify a Tax-Free Childcare payment. The reference will soon change to NS and I TFC.

 

The statement entry (National Savings A) should also contain the child’s:

  • childcare reference number – made up of 4 letters and 5 numbers. The letters are the first initial and the first 3 letters of the child’s surname. For example AJON12345
  • Tax-Free Childcare account number - this will be 13 digits long, begin with 1100 and should contain the letters TFC. For example TFC 1100012345678

Depending on the provider’s bank, a typical entry may look like this:

NATIONAL SAVINGS A FP11s11111/REMI/TFC 1100012345678/ROC/ AJON12345/FPID/111111100N111111

 

If your bank displays the payment information differently and you are unable to identify a parent’s payment, you should call the childcare service helpline on 0300 123 4097. 

Providers who haven't been able to sign-up because of UTR

 

The HMRC are changing their system in December 2019 to remove the necessity of providers having a UTR number, which has prevented some registering to offer the scheme.  We'll update this page when we've heard it's changed, but parents can claim compensation for missed TFC top-ups.

 

Parents should use this form if they:

  • have paid full childcare costs without receiving the government top up
  • are unable to complete an application for Tax-Free Childcare, because of a technical difficulty with the childcare service, which they are yet to resolve
  • are unable to access their childcare account, because of a technical difficulty with the childcare service, which they are yet to resolve.

If parents have any issues please advise them to contact HMRC's helpline and they will talk them through the process to claim this.

 

Find out more about Tax-Free Childcare.

11 Nov 2019

Author
Tina Ironside
Early Years and Childcare
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