Martin Lewis has explained how parents could save thousands of pounds on childcare costs.
On The Martin Lewis Money Show Live on ITV, the financial guru spoke about the Tax-Free Childcare scheme. He first said the name of this Government scheme can be misleading as it isn't actually about tax, it is just called tax-free childcare.
Martin added: "It only applies if you work and you earn the equivalent of 16 hours a week at national minimum wage and that can vary depending on your age." He also warned that about 800,000 people were missing out on this benefit and it was "worth checking" to see if they could claim it.
Read More: All the Child Benefit changes you must report to HMRC or risk missing out on payments
He said: "There are 800,000 people eligible for tax-free childcare, eligible for free money from the state. But this scheme has been complicated and under-publicised, and many of you are missing out."
If you are eligible for the scheme, Martin explained that you could get up to £500 tax-free every three months, which is up to £2,000 a year, for each of your children to help with the costs of childcare. This goes up to £1,000 every three months, which is up to £4,000 a year if a child is disabled, reports The Mirror.
Regarding eligibility for Tax-Free Childcare, the consumer champion said: “To get this, you must be working an average of 16 hours or more per week, you can be self-employed, and if you’re a couple, you must both be working 16 hours or more and the maximum you can both earn is £100,000."
If you are eligible to get the cash, you'll need to set up an online account for your child on the Government's website. Then, for every 80p you deposit into the Tax-Free Childcare online account, you will receive an additional 20p in Government top-ups which essentially, the Government is paying for 20% of your childcare costs.
The maximum amount you can add to the account is £8,000 per year which means you would get a boost of £2,000 to help with childcare costs. This scheme can be used to pay for childcare for children aged up to 11 years, or 17 if the child has a disability.
Martin said it didn't matter what sort of childcare you choose, the only important thing is that your provider is registered with the Tax-Free Childcare scheme, as well as with a regulator such as Ofsted, the Early Years Register or the Childcare Register.
In addition, the Money Saving Expert noted that for children aged three or four you can get up to 30 hours of free childcare a week and those claiming Universal Credit and in work can claim back up to 85% of the amount they spend on childcare.
Read Next:
Four golden rules to help parents save money in 2023, from budgeting tricks to managing income
Martin Lewis fan's credit card trick that allowed him to claim £4,780 cashback
DWP announces big changes to the way child maintenance is paid
Martin Lewis fan on Universal Credit receives free £600 after following his advice - here's how
Quick ways to check if you are missing out on DWP benefits or discounts to boost income
