HM Revenue and Customs (HMRC) is reminding eligible working families that they can save up to £2,000 a year on childcare costs with a unique tax-free UK Government scheme. Tax-Free Childcare has helped 38,495 families in Scotland save on childcare during the 2022 to 2023 financial year, an increase of more than 9,300 from the previous year.
The financial support is available to pay for approved childcare including holiday clubs, breakfast and after school clubs, child minders and nurseries. Last year, £533 million in UK Government cash was shared by families across the UK who saved money on their childcare bills.
Working families, with children up to the age of 11, or 16 if their child has a disability, can save up to £2,000 a year per child or £4,000 a year if their child is disabled. For every £8 paid into a Tax-Free Childcare account, families automatically receive an additional government top up of £2.
Families can save up to £500 every three months for each child or £1,000 if their child is disabled.
HMRC said this is one of many ways the UK Government is easing cost of living for people across the country, while taking action to halve inflation this year which is currently adding pressure to household budgets.
Victoria Atkins, The Financial Secretary to the Treasury, said: “While thousands more working families are benefiting from Tax-Free Childcare, which is making a real difference to their childcare bills, many more are missing out on the help they’re entitled to.
“Parents should check their eligibility and apply online, the top-up could make a big difference to working families at a time they need it most.”
Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “Tax-Free Childcare is a flexible benefit for families, allowing them to save towards the cost of childcare throughout the year and use it when they need it. It can be a real boost to the household budget of working families.”
Eligibility for Tax-Free Childcare
More than one million families could be eligible for Tax-Free Childcare. Families who haven’t signed up should check their eligibility and sign up to start saving today.
Opening a Tax-Free Childcare account is straightforward and can be done online in about 20 minutes. Money can be deposited at any time at any time of the year to be used straight away, or whenever it is needed. Unused money in the account can be withdrawn at any time.
Families could be eligible for Tax-Free Childcare if they:
- have a child or children aged 11 or under. They stop being eligible on 1 September after their 11th birthday. If their child has a disability, they may get up to £4,000 a year until 1 September after their 16th birthday
- earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average
- each earn no more than £100,000 per annum
- do not receive Tax Credits, Universal Credit or childcare vouchers
A full list of the eligibility criteria is available on GOV.UK here.
Families can learn more about the childcare offers available to them and what support they’re entitled to by visiting Childcare Choices here.
To keep up to date with the latest benefits news, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.
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