Working parents earning less than £100,000 per year are being urged to claim a benefit from HM Revenue and Customs (HMRC) worth £2,000 annually.
Tax-free childcare gives parents who aren’t eligible for Tax Credits or Universal Credit help towards approved childcare costs, including childminders, nurseries, nannies, after school clubs and play schemes. Claimants can get £500 every three months from HMRC for each child under the age of 11, which amounts to a maximum of £2,000 per year. This amount rises to £1,000 every three months if a child is disabled, giving parents £4,000 annually towards extra hours of childcare, as well as specialist equipment that may be required, like mobility aids.
HMRC issued a reminder to parents this week to check their eligibility for the benefit in a post on X (formerly Twitter), as it could save them thousands of pounds per year.
The government department said: “Attention parents. Tax-Free Childcare offers working parents savings of up to £2,000 a year per child on approved childcare costs, including school and sports clubs. To get started, check your eligibility below.”
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 to be eligible. HMRC says over the next three months, parents must each expect to earn at least:
- £2,379 if you’re aged 21 or over
- £1,788 if you’re aged 18 to 20
- £1,331 if you’re under 18 or an apprentice
This is the National Minimum Wage or Living Wage for 16 hours a week on average over a period of three months. Those who are self-employed and started their business less than 12 months ago can earn less and still be eligible for Tax-Free Childcare. Parents won’t be eligible if they are in receipt of any of the following benefits:
- Working Tax Credit
- Child Tax Credit
- Universal Credit
- Childcare Vouchers
If you’re not currently working, you may still be eligible if your partner is working, and you get any of the following:
- Incapacity Benefit
- Severe Disablement Allowance
- Carer’s Allowance or (in Scotland only) Carer Support Payment
- contribution-based Employment and Support Allowance
- National Insurance credits on the grounds of incapacity for work or limited capability for work
You can apply if you’re starting or re-starting work within the next 31 days and if eligible, you can receive Tax-Free Childcare for your child until September 1 after their 11th birthday, or until September 1 after their 16th birthday if they are disabled.
You can also claim Tax-Free Childcare alongside 30 hours for working parents. Applications can be made online via the Childcare Choices website.
