HMRC is urging working families to check if they can save money on their childcare costs in time for the school holidays.
With the Easter break just weeks away, families yet to sign up for Tax-Free Childcare could be missing out on annual savings of up to £2,000 per child, or £4,000 if their child is disabled.
Tax-free childcare can help pay for approved childcare for children aged 11 or under, or up to 16 if the child has a disability.
According to HM Revenue and Customs (HMRC), parents can receive up to £500 (or £1,000 if their child is disabled) every three months. This means for every £8 paid into their online account, they will automatically receive an additional £2 top-up from the Government.
Myrtle Lloyd, HMRC’s director general for customer services, said: “Springtime is a good opportunity to take a fresh look at family finances. A quick check online and you can find out how Tax-Free Childcare can help cut the cost of your childcare bills.
“Every bit of financial support helps – I would urge families to ’hop to it’ and search ‘Tax-Free Childcare’ on GOV.UK to find out how you could be better off and open your account today.”
It takes just 20 minutes to apply online for a Tax-Free Childcare account and can be used to help pay for a child’s nursery, childminder, breakfast, after-school club, or holiday activity club.
It can also be used alongside the 15 or 30-hour free childcare offer and to help pay for any specialist equipment needed for a disabled child when they’re attending childcare.
Once an account is opened, parents can deposit money immediately, so it is ready to be used whenever it is needed. Unused money in the account can be withdrawn at any time.
Who is eligible for tax-free childcare?
Families could be eligible for Tax-Free Childcare if they have a child or children aged 11 or under.
They stop being eligible on September 1 after their 11th birthday. If their child has a disability, they may get up to £4,000 a year until September 1 after their 16th birthday.
Individuals should earn or expect to earn at least the National Minimum Wage or Living Wage for an average of 16 hours per week.
Additionally, claimants must have an annual income of no more than £100,000 and should not be receiving Tax Credits, Universal Credit, or childcare vouchers.
A full list of the eligibility criteria is available on GOV.UK.
Eligible working parents of two-year-olds can also register to access 15 hours of free childcare per week from April 2024.
The offer will expand to 30 free hours of childcare for working parents from nine months old up to when their child starts school by September 2025 and is set to save parents using the full 30 hours up to £6,900 per year.
Families can learn more about the childcare offers available to them and what could fit their family by visiting the Government’s Childcare Choices website.
