HMRC is urging more working parents to sign up to its Tax-Free Childcare scheme, revealing that 601,620 UK households have already benefited from a boost worth up to £2,000 a year. The call comes ahead of the Halloween school holidays, with the tax authority encouraging families to act now to save on childcare costs.
Latest figures show that 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 Tax-Free Childcare savings pot. For every £8 parents deposit in their child's account, the government tops it up by £2.
How Tax-Free Childcare works
The scheme 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 up to age 16 if the child is disabled. It pays a 20% bonus on any money put into the childcare account, which is then used to pay for nursery or childminders.
A family putting £8,000 into the account per year would receive £2,000 on top, effectively reducing the cost of nursery by 20%. Parents can receive up to £500 (or £1,000 if their child is disabled) every 3 months towards their childcare costs.
Eligibility and how to apply
HMRC said: “More than 600,000 families cast a savings spell and cut their childcare costs with Tax-Free Childcare HM Revenue and Customs (HMRC) reveals, as it encourages others to sign up ahead of the spooky school holidays.”
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 Hallowe'en. Tax-Free Childcare can make a real difference. Go to GOV.UK to find out more today.”
Families could be eligible if they have a child or children aged 11 or under (they stop being eligible on 1 September after their 11th birthday, or after their 16th birthday if the child has a disability), if the parent and their partner (if they have one) earn at least the National Minimum Wage or Living Wage for 16 hours a week on average, if each earns no more than £100,000 per annum, and if they do not receive Universal Credit or childcare vouchers.
Once families have opened an account, they can deposit money and use it straight away or keep it in the account to use whenever it's needed. Any unused money can be withdrawn at any time. Savings can be used to pay for approved childcare, including nurseries, before and after school clubs, or activity clubs during school holidays.
