His Majesty's Revenue and Customs (HMRC) has issued an update ahead of the October half-term break, reminding families they could receive up to £2,000 to help with childcare costs. The government agency revealed that more than 600,000 families have already reduced their childcare costs through Tax-Free Childcare, as it urged others to register.
How Tax-Free Childcare works
Tax-Free Childcare assists working families with their childcare expenses by saving up to £2,000 per year for each child up to the age of 11, or £4,000 per year up to age 16 if the child is disabled, HMRC said. For every £8 parents deposit into their child's account, the government contributes an additional £2.
The latest figures showed 601,620 families received a share of £55.7 million in government top-ups in June, with each family receiving an average of £93 added to their Tax-Free Childcare savings pot.
What parents need to know
Parents can receive up to £500 (or £1,000 if their child is disabled) every three months towards their 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 families have opened a Tax-Free Childcare account, they can deposit money and use it immediately or keep it in the account to use whenever it's needed. Any unspent money can be withdrawn at any time.
Eligibility and next steps
Families could be eligible if they have a child aged 11 or under (eligibility stops on September 1 after their 11th birthday), or up to £4,000 a year until September 1 after their 16th birthday if the child has a disability. Parents and their partner 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.
Myrtle Lloyd, HMRC's chief customer officer, said: "Paying for childcare while you work doesn't have to be a nightmare for your bank balance this Halloween. Tax-Free Childcare can make a real difference. Go to GOV.UK to find out more today."
Registering now means families can save on Halloween half-term childcare arrangements and those for the coming year. Full eligibility details are available on GOV.UK, and Tax-Free Childcare can be used alongside free childcare hours, subject to eligibility, HMRC confirmed.
