Millions of working parents across the UK could be entitled to reclaim as much as £2,000 per child each year through the Tax-Free Childcare scheme, but the support comes with a three-month warning. Under the government programme, families earning under £100,000 may be eligible for the financial help, which is operated by HM Revenue and Customs (HMRC).
Tax-Free Childcare helps working parents reduce spending on childcare costs. In addition to earning below the threshold, parents are eligible if they have a child aged under 11, or under 16 if the child is disabled. The discount can be used to pay for school clubs, childminders and other wraparound care, and is worth up to £2,000 per child each year, or up to £4,000 for a disabled child.
How the scheme works
Once signed up, the government contributes £2 for every £8 a parent pays into their online account. According to Gov.uk: "You can get Tax-Free Childcare at the same time as 15 or 30 hours free childcare if you're eligible for both." The benefit applies to a range of childcare services, including after-school clubs, childminders, nurseries and nannies.
The childcare provider must be registered on the scheme for payments and top-ups to be made. For parents of disabled children, the extra funds can be used to pay for additional childcare hours and to help providers acquire specialist equipment, such as mobility aids.
Eligibility and the three-month rule
Eligibility depends on several factors, including employment status, earnings, the child's age and circumstances, and immigration status. According to HMRC, parents can generally access the scheme if they are in employment, on sick or annual leave, or on shared parental, maternity, paternity or adoption leave, provided they are due to return to work within 31 days of the date of the initial application.
Parents not currently in work may still be eligible if their partner is employed and they receive Severe Disability Allowance, Incapacity Benefit, Carer's Allowance, Carer Support Payment (Scotland only) or contribution-based Employment and Support Allowance.
Regardless of circumstances, parents must reconfirm that their details are up to date with HMRC once every three months to continue receiving support. Failing to do so will result in the government halting any further payments into the Tax-Free Childcare account.
