HM Revenue and Customs (HMRC) have reminded working families that they could miss out on a tax-free cash boost if they don't act now.
Families across the UK could be entitled to help with childcare costs during the summer holidays. Through Tax-Free Childcare, eligible families and carers can receive up to £500 every three months per child ( £2,000 each year ), or £1,000 every three months (£4,000 each year) if their child is disabled.
It is available for children aged up to 11, or the age of 17 if the child has a disability. The money can help to pay for holiday clubs, before and after school clubs, childminders, nurseries and other approved childcare schemes, reported Daily Record.
READ MORE: DWP can stop Universal Credit payments and force you to come home if you're on holiday
Here is everything you need to know about the childcare scheme. It includes how it works and who is eligible.
How does it work?
The UK Government will pay 20% of childcare costs by topping up the money paid into a Tax-Free Childcare account. This means for every £8 paid into the online account, families will automatically receive an additional £2 top-up.
HMRC warned thousands of families may be missing out on the tax-free boost after research published by the UK Government in May this year estimated that around 1.3 million families could be eligible. For thousands of families who use Tax-Free Childcare, the money they save each month on costs is cash that goes back into their pockets.
Accounts can be opened at any time of the year and used straight away. Money can be deposited at any time and used when needed and any unused money can be withdrawn at any time.
During the school summer holidays, it is more important than ever that parents and carers are able to access the financial aid they qualify for as it can reduce outgoing costs, help them to stay in work, or allow them to work more hours. Parents and carers are being urged to find out more about Tax-Free Childcare through the Childcare Choices website - find out more on GOV.UK here.
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."
Tax-Free Childcare eligibility
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
There is a full step-by-step guide to claiming Tax-Free Childcare on GOV.UK here.
Receive newsletters with the latest news, sport and what's on updates from the Liverpool ECHO by signing up here
READ NEXT:
- DWP's warning to people expecting £326 cost of living payment
- Martin Lewis' warning if you pay your energy bills by direct debit
- Change of flight fees for easyJet, TUI, Ryanair, Jet2 and British Airways
- DWP confirms households will receive extra £1,200 by Christmas
- DWP claimants urged to check if they qualify for £3,300 extra cash
