HMRC has issued a fresh call for parents to sign up for Tax-Free Childcare, highlighting that families can save nearly £100 a month. The reminder comes as Andy Burnham settles into his role as Prime Minister, with the tax authority keen to promote the scheme during the summer holidays.
What is Tax-Free Childcare?
Tax-Free Childcare is a government scheme designed to help working families with the cost of childcare. Eligible parents can receive up to £2,000 per year per child, or £4,000 for a disabled child, to cover expenses such as nurseries, childminders, holiday clubs, and after-school clubs.
Under the scheme, for every £8 a family deposits into their Tax-Free Childcare account, the government adds £2. This top-up can be used to pay for any approved childcare provider, including breakfast and after-school clubs.
Who is Eligible?
To qualify, parents must have a child or children aged 11 or under, or up to 16 if the child is disabled. Both parents (if in a couple) must earn at least the National Minimum Wage or Living Wage for 16 hours a week on average, and each must earn no more than £100,000 per annum. Additionally, families cannot receive Universal Credit or childcare vouchers to be eligible.
According to HMRC, the number of families using Tax-Free Childcare for children aged 8 and above has increased by 20 per cent, showing the scheme's growing popularity among parents of older children.
New Leadership, Same Scheme
The scheme remains unchanged under the new Labour government led by Andy Burnham, who took over from Sir Keir Starmer. Chancellor John Healey, now in charge of HM Treasury, will oversee HMRC alongside the Prime Minister. Despite the change in leadership, the rules and benefits of Tax-Free Childcare have not been altered.
Burnham has promised to help households with the cost of living, and Tax-Free Childcare could be a crucial tool in that effort. With summer childcare costs looming, the scheme offers a practical way for families to save money.
How to Apply
Parents can open an account for each of their children aged up to 11, or up to 16 for disabled children. The application process is straightforward and can be completed online via GOV.UK.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said: "Tax-Free Childcare can help with your summer childcare plans and, looking to the term ahead, with whatever type of care you require for your child. If you haven’t signed up already, do it today so you don’t miss out. Go to GOV.UK and search ‘Tax-Free Childcare’."
Playday Reminder
The reminder coincides with Playday, the national day for play, which serves as a timely prompt for eligible parents to check if they could benefit from the scheme. With many families organising holiday clubs and activities for their children, Tax-Free Childcare offers significant financial relief.
HMRC’s latest statistics show that families using the scheme save almost £100 a month on average, making it a valuable resource for working parents. As the new government focuses on easing the cost-of-living pressures, this scheme remains a key support mechanism.
