Tax-Free Childcare can provide up to £2,000 per year per child (Image: Getty)
HM Revenue and Customs (HMRC) is urging households across the UK to “sign up” for £2,000 worth of payments per year.
The money comes from the Government’s Tax-Free Childcare scheme, which provides working families with top-up payments to help with the cost of paying for childcare. For every £8 that is paid into a Tax-Free Childcare account, the Government will top it up by £5. The total top-up families can get for each child under the age of 11 is £500 every three months, which works out to a maximum of £2,000 per year. This amount rises up to £1,000 every three months if they have a disabled child aged up to 16, giving parents up to £4,000 annually towards approved childcare.
HMRC has today (August 4) reminded families to check if they are eligible for the scheme as latest statistics show that those already signed up saved an average of almost £100 per month.
The money can be used to pay for an array of approved childcare including nurseries, childminders, holiday clubs, breakfast clubs and after-school clubs, with almost 75,000 providers now signed up to receive Tax-Free Childcare payments.
Once families have opened a Tax-Free Childcare account, they can deposit money and use it straight away or keep it in their account to use it whenever it’s needed, and any unused money can be withdrawn at any time.
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 and said for those who qualify, it’s “a no-brainer” to sign up.
To be eligible, parents need to be at least 16 years old, be in qualifying paid work and not have an expected ‘adjusted net income’ over £100,000. If you claim either Universal Credit or childcare vouchers, you cannot get Tax-Free Childcare at the same time.
In a July MSE money tips email, MSE said: “300,000 homes miss out on up to £2,000/yr via the ‘Working Family Childcare Top-up’ scheme.
“You won’t have heard of this, because we made the name up. It’s what we campaign for the formally titled ‘Tax-Free Childcare’ scheme to be called, as its real name is misleading and confusing: it has little to do with tax, and isn’t tax-free.
“In reality, it’s a top-up to help working families pay for childcare. The worry is that the confusing name is one of the reasons 300,000 eligible families still don’t claim it. So if you’re not on UC [Universal Credit], this is worth a look.”
You can apply for the HMRC scheme at any time unless you’re starting or re-starting work, or you’re on maternity, paternity, shared parental or adoption leave. If you’re starting or returning to work, you can apply from the following dates:
Starting or returning to work between October 1 and January 31 – apply from September 1
Starting or returning to work between February 1 and April 30 – apply from January 1
You can also claim Tax-Free Childcare at the same time as 30 hours of free childcare through Free Childcare for Working Parents if you’re eligible for both.
