HMRC has issued an update telling families they can get up to £1,000 every three months if they sign up for Tax-Free Childcare. The tax authority said more than 600,000 families have already cut their childcare costs with the scheme, and it is encouraging others to sign up ahead of the October half-term.
How the scheme works
Tax-Free Childcare helps working families with childcare costs by saving up to £2,000 per year for each child up to the age of 11, or £4,000 per year for a disabled child up to age 16, HMRC said. Latest figures show 601,620 families received a share of £55.7 million in government top-ups in June, with each family getting an average of £93 added to their savings pot. For every £8 parents deposit in their child's account, the government tops it up by £2.
What families can receive
Parents can receive up to £500 (or £1,000 if their child is disabled) every three months towards childcare costs. Savings can be used to pay for approved childcare such as nurseries, before and after school clubs, or activity clubs during school holidays. Once an account is opened, families can deposit money and use it straight away or keep it for later, and any unused money can be withdrawn at any time.
Eligibility requirements
Families may be eligible if they have a child aged 11 or under, with eligibility ending on September 1 after the child's 11th birthday. For disabled children, families can receive up to £4,000 a year until September 1 after their 16th birthday. The parent and partner (if applicable) must earn at least the National Minimum Wage or Living Wage for 16 hours a week on average, and each must earn no more than £100,000 per annum. Families receiving Universal Credit or childcare vouchers are not eligible. Full eligibility details are available on GOV.UK, and Tax-Free Childcare can be used alongside free childcare hours, subject to eligibility.
