Working parents across Scotland are being encouraged to check whether they could receive up to £2,000 a year towards childcare costs through a government scheme available throughout the year.
HM Revenue and Customs (HMRC) has confirmed that 37,145 families in Scotland are already benefiting from Tax-Free Childcare, which provides financial support towards approved childcare, including nurseries, before and after-school clubs and holiday activity clubs.
How Tax-Free Childcare works
Eligible families can receive up to £500 every three months for each child, rising to £1,000 every three months for children with disabilities. Unlike support linked to school holidays, Tax-Free Childcare can be used throughout the year, helping parents meet regular childcare costs or save towards future expenses.
The latest HMRC figures show that £55.7 million in government top-ups was added to Tax-Free Childcare accounts across the UK in June, with families receiving an average contribution of £93.
For every £8 parents pay into a Tax-Free Childcare account, the government adds another £2, up to the maximum allowance.
Who qualifies for Tax-Free Childcare?
Working parents may be eligible for the scheme if they meet certain conditions relating to their children's ages, earnings and other financial support.
- Have a child aged 11 or under, or a disabled child aged 16 or under
- Both parents, where applicable, must each earn or expect to earn at least the equivalent of 16 hours a week at the National Minimum Wage or National Living Wage, on average
- Neither parent can earn more than £100,000 a year
- The household must not be receiving Universal Credit or childcare vouchers
Eligibility for most children ends on September 1 following their 11th birthday. For children with disabilities, the scheme can continue until September 1 following their 16th birthday.
Families with more than one eligible child can receive government contributions for each child, provided they open a separate Tax-Free Childcare account for each one.
How much can parents receive?
Tax-Free Childcare provides a government contribution towards eligible childcare costs rather than a fixed payment made directly to parents.
For every £8 deposited into an account, the government adds £2. For example, if parents deposit £80, the government adds £20, leaving £100 available to spend on approved childcare.
The maximum contribution is £500 every three months, equivalent to £2,000 over a year for each eligible child. For children with disabilities, the maximum contribution doubles to £1,000 every three months, or £4,000 annually.
The amount received depends on how much money parents deposit into their accounts and whether they continue to meet the scheme's eligibility requirements.
Childcare costs covered by the scheme
The money can be used towards a range of approved childcare arrangements, including nurseries, before and after-school clubs and activity clubs during school holidays.
This means parents can use their accounts to help with regular childcare costs during the school term as well as additional expenses when schools are closed.
Once a Tax-Free Childcare account has been opened, parents can deposit money and use it straight away or leave the balance in the account until it is needed. HMRC has confirmed that unused money can also be withdrawn at any time.
The scheme can be used alongside funded childcare hours, subject to the relevant eligibility requirements. However, families cannot receive Tax-Free Childcare at the same time as Universal Credit or childcare vouchers.
Parents must confirm their details every three months
HMRC has advised that families must reconfirm their eligibility every three months to continue receiving government top-ups. This involves checking that their personal circumstances and details remain up to date.
Parents who have more than one eligible child must have a separate account for each child, with the government contribution applied individually rather than as a single household allowance.
HMRC's Chief Customer Officer, Myrtle Lloyd, encouraged working families to check whether they could benefit from the scheme, stating that Tax-Free Childcare can make a real difference to household budgets.
Families who have not previously applied can check the full eligibility conditions and open an account through GOV.UK. The scheme is available throughout the year, meaning eligible parents do not need to wait until the next school holiday to start using the support.
