With an ever-rising cost of living crisis hitting UK households, many families are missing opportunities of free support from the Government - worth up to £2,000 a year per child.
Households with disabled children could also get even more financial assistance, with the Tax-Free Childcare scheme. However, many will get nothing as they do not claim on the aid, with experts now urging families to check their eligibility status.
The scheme itself pays money towards the cost of childminders, nurseries, nannies, play schemes and after school clubs. In May alone, it allowed 395,000 families with 472,000 children to go to work without seeing wages consumed by childcare costs, amounting to a total of £43.8million.
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The Express reports that this is the highest level of top-up since the scheme was initiated in April 2017, says Laura Suter, head of personal finance at AJ Bell. “Parents desperate to make their budgets balance in the cost of living crisis have increasingly turned to Government schemes they had overlooked before. Use of tax-free childcare is at a record high as people hunt for ways to boost their income," she said.
Despite this however, Laura highlighted that although around 1.3million families thought to be eligible for the assistance, it is still 'grossly underused with huge sums sitting around unclaimed'. She added that the average family has 1.9 children, and could be obtaining in the ballpark of £3,800 on average towards their childcare costs per year.
She continued: “The UK has some of the highest childcare costs in the world and this additional money would go a long way to keeping some families afloat in the current bills crunch.”
Under the Tax-Free Childcare scheme, families can receive as much as £500 every three months, up to a maximum sum of £2,000 per annum. That's per child too, so families with two children could receive up to £4,000 each year, and the payment is doubled if a child is disabled.
This means that families with disabled children can receive up to £1,000 every three months, or £4,000 every year.
The Government is also encouraging families to claim, with eligible parties able to set up an online childcare account at: Gov.uk/tax-free-childcare, and pay money into it towards costs. For every £8 paid into the account, the Government will add an extra £2 which will be used to pay a childcare provider.
The provider also must be signed up to the scheme before you can qualify though, so check with your provider before enrolling.
To qualify, you usually must be in work, on sick or annual leave, or on shared parental, maternity, paternity or adoption leave. You may also be eligible if your partner is working and you are in receipt of incapacity benefit, Severe Disablement Allowance, Carer's Allowance or contribution-based Employment and Support Allowance.
You can apply also if you're starting or re-starting work within the next 31 days.
Tax-Free Childcare is means tested, as you need to expect to earn at least the National Minimum or Living Wage for at least 16 hours a week on average, over a three-month period. So over the course of the next quarter, you should expect to earn at least £1,976, which is the NLW for people over 23.
If you're coupled up with a partner, they'll need to expect to earn this much also.
Self-employed people who do not expect to make enough profit over the next three months can average how much they expect to earn this year. The earnings limit does not apply if you’re self-employed and started your business less than 12 months ago.
Higher earners may be excluded. If you or your partner have an expected ‘adjusted net income’ over £100,000 in the current tax year, you will not be eligible. This includes bonuses. Suter said the Government needs to do more to publicise the Tax-Free Childcare scheme. “Many parents are confused about whether they are eligible, if they can use it for all forms of childcare, or just aren’t aware that the scheme even exists.”
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