The government is reminding parents that they could be eligible for up to £2,000 in tax-free childcare. Thousands of families are eligible to save up to £500 every three months, or £1,000 if their child is disabled.
HM Revenue and Customs are encouraging all families to check whether they are entitled to the funding, which can be used to pay for half-term childcare. It can include holiday clubs, before- and after-school clubs, childminders, nurseries and other government-approved childcare schemes.
The fund is available to families with children up to the age of 11, or 17 if their child has a disability. However, families on Universal Credit are not entitled to Tax-Free Childcare and if parents are in receipt of Working Tax Credit or Child Tax Credit, this will stop if you choose to sign up.
You must be expected to earn at least the national minimum wage for 16 hours a week on average for the next three months and so must your partner if you live together. Your eligibility also depends on your immigration status.
The account works by parents depositing money into their Tax-Free Childcare account. For every £8 parents pay into the account, the Government will contribute £2, up to a maximum of £2,000 a year (or £4,000 a year if your child has a disability).
Parents then use the money in this account to pay their childcare provider. Then every three months, parents will need to reconfirm their eligibility through their online account, and a text reminder will be sent when this needs to be done.
The Government pays 20% of childcare costs by topping up the money paid into a Tax-Free Childcare account. For every £8 paid into the online account, families automatically receive an extra £2 from the Government
Myrtle Lloyd, HMRC’s director general for customer services, said: "Tax-Free Childcare can make a big difference to families, helping with the bills for things like holiday clubs, nurseries, childminders and after-school clubs. It’s easy to register – search ‘Tax-Free Childcare’ on GOV.UK."
HMRC says that more than 391,000 families saved money on childcare in June thanks to the scheme, which is worth up to £41.6 million in top-up payments. Accounts for the scheme can be opened at any point during the year and can be used straight away.
More than one million families in the UK are entitled to some form of government childcare support and the government is encouraging those eligible to not miss out on their entitlements. Families can find out what childcare support is best for them via the Childcare Choices website.
HMRC is also keen to remind parents of its other support options for those with children. Schemes include 15 or 30 hours of free childcare for eligible families, child benefits, free school meals, National Breakfast Clubs and Healthy Start vouchers.
Find out more on the Government's Help for Households portal, here.
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