Families all across the country have been issued a reminder by HM Revenue & Customs (HMRC) that they could save a lot of money with tax-free childcare.
According to the government agency, more than 405,000 families managed to save money on childcare costs in December with tax-free childcare costs and is urging those not yet signed up to do so as soon as possible. The latest government figures reveal that £41.5 million in top-up payments were made to working families by the government in December 2022.
HMRC said the same figures show that each family roughly saved up to £2,000 a year per child or £4,000 if their child is disabled. Families can apply for the financial support until their child reaches the age of 11 (or 16, if the child has a disability).
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Myrtle Lloyd, HMRC’s Director General for Customer Services, said: "We want to help families get the most out of their finances and Tax-Free Childcare can help pay towards their childcare costs. Search ‘Tax-Free Childcare’ on GOV.UK to get started."
HMRC has stated that more than one million families across the UK are entitled to some form of government childcare support. For every £8 paid into the tax-free childcare account. families will automatically receive an additional £2.
With this, families could potentially save up to £500 every three months for each child - equating to £2,000 a year, or £4,000 a year if the child is disabled.
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 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 under £100,000 per annum
- Do not receive tax credits, Universal Credit or childcare vouchers
HMRC also has a full-guide on its website for parents who may want to sign up for the scheme.
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