Millions of UK households could be entitled to claim as much as £2,000 back from HM Revenue and Customs (HMRC) this year, but the scheme comes with a three-month warning. The Tax-Free Childcare programme helps working families earning below £100,000 cut childcare costs, and parents must verify their information with HMRC every three months to keep receiving payments.
How Tax-Free Childcare works
Tax-Free Childcare is available to families with a child under 11 years old, or under 16 if the child is disabled. The benefit is worth up to £2,000 per child each year, or up to £4,000 if the child is disabled. Once signed up, the government contributes £2 for every £8 parents pay into their online account.
The support can be used to pay for school clubs, childminders, nurseries, nannies, and other wraparound care. 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 childcare provider must be registered with the scheme for payments and top-ups to be made.
Eligibility and income criteria
Whether you qualify depends on multiple criteria, including your work situation, income level, your child's age and circumstances, and your immigration status. HMRC states that you can typically access the scheme if you're employed, taking sick or annual leave, or on shared parental, maternity, paternity or adoption leave, provided you're returning to work within 31 days of your initial application date.
You might still be eligible if you're not working, as long as your partner is employed and you're receiving Severe Disability Allowance, Incapacity Benefit, Carer's Allowance, Carer Support Payment (Scotland only) or contribution-based Employment and Support Allowance. For parents with disabled children, the extra money can cover additional childcare hours and help providers acquire specialist equipment such as mobility aids.
Three-month verification requirement
Regardless of circumstances, parents must confirm their information is up to date with HMRC every three months. If they fail to do so, the government will stop making payments into the Tax-Free Childcare account.
