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£2,000 towards childcare costs

Thousands of working families in the UK could be missing out on an opportunity to get up to £2,000 a year towards childcare costs, HM Revenue and Customs (HMRC) is reminding parents, ahead of February half term.

Tax-Free Childcare – the 20% childcare top-up – provides eligible working families with up to £500 every three months (or £1,000 if their child is disabled) towards the cost of holiday clubs, before and after-school clubs, childminders and nurseries, and other accredited childcare schemes.

Nearly 316,000 working families used Tax-Free Childcare across the UK in September 2021, receiving a share of £35 million in government top-up payments towards their childcare costs – an increase of about 90,000 families compared to September 2020.

Eligibility

Tax-Free Childcare is available for children aged up to 11, or 17 if the child has a disability. For every £8 deposited into an account, families will receive an additional £2 in government top-up.

This scheme is one of many ways the government is supporting households to raise their incomes and keep more of what they earn.

Parents and carers can check their eligibility and register for Tax-Free Childcare via GOV.UK.

Whether it’s for holiday clubs, breakfast clubs, or childminders and nurseries, Tax-Free Childcare is a great offer that gives working parents a helping hand with their childcare costs.

This Government is committed to supporting working families which is why it’s fantastic that thousands more are saving money through the Tax-Free Childcare scheme. I urge as many parents as possible to take advantage of this support.

Helen Whately, Exchequer Secretary to the Treasury

By depositing money into their accounts, families can benefit from the 20% top-up and use the money to pay for childcare costs when they need it. Accounts can be opened at any time of the year and can be used straight away.

For example, if parents and carers have school-aged children and use holiday clubs during school holidays, they could deposit money into their accounts throughout the year. This means they could spread the cost of childcare while also benefitting from the 20% government top-up.

Pre-school children

Tax-Free Childcare is also available for pre-school aged children attending nurseries, childminders, or other childcare providers. Families with younger children will often have higher childcare costs than families with older children, so the tax-free savings can really make a difference.

Childcare providers can also sign up for a childcare provider account via GOV.UK to receive payments from parents and carers via the scheme.

If you have further accountancy questions contact AJR & Co Ltd