HMRC has urged working families in the UK not to miss out on a £500 tax-free boost to help cover costs over the summer holidays.
Working parents with young or school-aged children could be missing out on as much as £1,000 every three months to help with childcare costs. With just a few weeks of the school term left and the cost of living crisis getting worse due to the rise in energy and fuel prices, the boost could help with paying for holiday clubs and out-of-school activities during the summer months, reports The Daily Record.
Tax-free Childcare provides eligible working families with up to £500 every three months, or £1,000 if their child is disabled, towards the cost of holiday clubs, before and after-school clubs, childminders and nurseries, and other approved childcare schemes.
Read more: People who get PIP and DLA benefits could miss out on £500 cost of living payments
Families who deposit £8 into a Tax-Free Childcare online account receive an additional £2 in UK Government top-up. It is available for children aged up to 11, or 17 if that child has a disability.
It is estimated that 1.3 million families could be eligible for this support, with parents and carers being urged to check their eligibility and register here. 512.415 families used Tax-Free Childcare in the UK during the 2021/22 tax year, compared to 374,135 in 2020/21.
Helen Whately, HM Treasury's Exchequer Secretary to the Treasury, said: "It’s fantastic that more parents are taking up Tax-Free Childcare. This support provides a helping hand with childcare costs for working families.
"With over one million families eligible, I want to encourage parents to take advantage of Tax-Free Childcare and keep the extra pounds in their pocket."
Myrtle Lloyd, HMRC's Director General for Customer Services added: "Tax-Free Childcare can make a big difference to families, helping with the bills for things like nurseries, childminders and after school clubs."
How does the scheme work?
The scheme offers a 20% UK Government funded top-up on money deposited into Tax-Free Childcare accounts, which parents and guardians can use to pay their childcare provider. Accounts can be opened at any time and used straight away, with the possibility of depositing money any time and used when needed.
For example, if parents and carers have school-aged children and use holiday clubs outside of term-time, they could deposit money into their accounts throughout the year, meaning they could spread the cost of childcare while also benefiting from the 20% top-up. Any unused money that is deposited can be withdrawn at any time.
Pre-school children
Tax-Free Childcare is also available for pre-school aged children attending nurseries, childminders or other childcare providers. Families with younger children often see higher childcare costs than those with older children and tax-free savings may be able to make a difference.
Childcare providers can also sign up for a childcare provider account via GOV.UK to receive payments from parents and carers via the scheme.
Have you saved money by using Tax-Free Childcare? Let us know!
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