HM Revenue and Customs (HMRC) is urging households across the UK to sign up for £2,000 worth of payments per year through the Tax-Free Childcare scheme. The initiative provides working families with top-up payments to help cover childcare costs.
For every £8 paid into a Tax-Free Childcare account, the Government adds £5. Families can receive up to £500 every three months for each child under 11, totalling £2,000 per year. For disabled children up to age 16, the top-up rises to £1,000 per quarter, offering up to £4,000 annually.
Eligibility and savings
HMRC reminded families to check eligibility on August 4, as latest statistics show those already signed up save an average of almost £100 per month. The funds can be used for approved childcare, including nurseries, childminders, holiday clubs, breakfast clubs, and after-school clubs, with nearly 75,000 providers now enrolled.
Once an account is opened, families can deposit money and use it immediately or save it for later, with any unused funds withdrawable at any time.
Expert advice and application
Myrtle Lloyd, HMRC’s Chief Customer Officer, said: “Tax-Free Childcare can help with your summer childcare plans and, looking to the term ahead, with whatever type of care you require for your child. If you haven’t signed up already, do it today so you don’t miss out. Go to GOV.UK and search ‘Tax-Free Childcare’.”
According to Martin Lewis’ MoneySavingExpert (MSE), 300,000 eligible UK households are missing out on this £2,000 per year top-up, calling it “a no-brainer” for those who qualify.
To be eligible, parents must be at least 16, in qualifying paid work, and have an expected adjusted net income under £100,000. Those claiming Universal Credit or childcare vouchers cannot receive Tax-Free Childcare simultaneously.
In a July MSE email, the site noted the scheme’s name is misleading and confusing, potentially deterring claims. It urged eligible families not on Universal Credit to apply.
Applications can be made anytime, except when starting or restarting work or on certain leave. Specific dates apply for those returning to work: from April 1 for returns between May 1 and September 30; from September 1 for October 1 to January 31; and from January 1 for February 1 to April 30. Tax-Free Childcare can be combined with 30 hours of free childcare if eligible.
