Around 800,000 parents are missing out on help towards childcare costs, which could add up to £2,000 a year - are you one of them?
With average childcare costs rising, and the cost of holiday childcare on the up too, it makes sense that parents benefit from all of the support they can get from the government. You might already be claiming child benefit to help you with the cost of raising your kids, or maybe you are eligible for the childcare portion of Universal Credit. But there are hundreds of thousands of parents who are eligible for another form of support from the government, and aren't yet claiming it - tax-free childcare.
According to money-saving expert Martin Lewis, the scheme is 'terribly named' and 'awfully confusing', which is likely a large reason behind why so many parents aren't claiming it. But as the summer holidays arrive, this scheme could help you pay for certain activities for your child over the break.
As Martin explained on a recent appearance on This Morning, 1.3 million people are eligible for the tax-free childcare scheme, but only 500,000 currently claim it. That means 800,000 parents are missing out on a substantial amount of cash towards their childcare costs.
While this scheme can be used for nursery care and childminder costs throughout the year, it's really timely as it it can also be used for holiday camps and clubs over the summer. The club must be registered with the tax-free childcare scheme and be regulated by a body such as Ofsted, the Early Years Register or the Childcare Register.
To be eligible:
- you need to be working (if you have a partner, they need to be working too)
- earn at least minimum wage equivalent for 16 hours a week, and less than £100,000 a year
- your child or children need to be age 11 or younger (16 or younger if your child is disabled).
Under the scheme, for every 80p you pay into your childcare account, the government will pay in 20p - up to a maximum of £2,000 per year, per child, £4,000 if your child is disabled. But while there is an annual cap, there is also a cap of £500 every three months. This means that it is worthwhile paying into your childcare account all year round – even if you don’t need to pay for any childcare one month.
To claim, you'll need to set up an online childcare account which you can do through the tax-free childcare website. You’ll need your national insurance number to set up your account and, if you are self-employed, your unique taxpayer reference. Then you can add the money by standing order or debit card, and the government top-up should appear within 24 hours. You then pay for the childcare directly from your childcare account.
It's worth knowing too that you need to reconfirm your eligibility for the tax-free childcare account every three months, but the good news is, it only takes a couple of minutes and you'll get an email reminder when you need to do it.
For more help with the cost of raising your children, make sure you understand what child benefit is, how child benefit could soon become fairer, and the repercussions of not claiming child benefit.
