HM Revenue and Customs (HMRC) is urging working families across the country to act now to avoid missing out on a tax-free cash boost. Thousands of parents, carers and families could receive financial support for childcare costs over the summer holidays.
The Tax-Free Childcare scheme sees the UK Government pay 20% of childcare costs. Eligible families and carers can receive up to £500 every three months per child (£2,000 each year). Alternatively, families can get £1,000 every three months (£4,000 each year) if their child is disabled.
This scheme can be used by those with children aged up to 11, or the age of 17 if the child has a disability. The money can be used to pay for holiday clubs, clubs run before or after school, childminders, nurseries and some other approved childcare schemes, reported the Daily Record.
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But who is eligible for the childcare scheme and how does it work? Here's everything you need to know.
How does the Tax-Free Childcare scheme work?
The Tax-Free Childcare scheme sees the UK Government pay 20% of childcare costs. They top up the money paid into a Tax-Free Childcare account, meaning families automatically receive an additional £2 for every £8 paid into the online account.
Research published by the UK Government in May this year estimated that around 1.3 million families could be eligible for this financial support. Accounts can be opened at any time of the year and used immediately.
Money can be deposited at any time and used as and when it is needed. Any unused money can be withdrawn at any time.
Parents and carers are being urged to find out more about Tax-Free Childcare through the Childcare Choices website now so that during the school summer holidays they can access financial aid. For parents who qualify, the scheme can reduce outgoing costs, help parents stay in work, or allow them to work more hours.
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." Helen Whately MP, HM Treasury’s Exchequer Secretary to the Treasury, urged families to sign up and save on childcare costs.
Ms Whately said: "Tax-Free Childcare helps families with the cost of childcare bills but we know that thousands of parents could be missing out, that is why I'm encouraging families to sign up now and save on childcare costs. There are lots of fantastic holiday clubs and childcare providers to help working parents during the summer holidays, so now is the time to take advantage of this support."
Who is eligible for Tax-Free Childcare?
Parents and carers could be eligible for Tax-Free Childcare if they:
- Have a child or children aged up to 11. 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 they are 17.
- Earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average.
- Each earn under £100,000 per year.
- Do not receive Tax Credits, Universal Credit or childcare vouchers.
You can find a full step-by-step guide to claiming Tax-Free Childcare on GOV.UK here.
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