Working families across the UK are being urged by HMRC to check their eligibility for Tax-Free Childcare, a scheme that can provide up to £2,000 a year per child – or £4,000 for a disabled child – to help cover childcare costs. The boost effectively saves parents nearly £100 a month on nursery fees, holiday clubs, and after-school care.
How the scheme works
Under the scheme, for every £8 parents pay into their Tax-Free Childcare account, the government adds £2 – a 25% top-up. This means a family spending £8,000 a year on childcare could receive £2,000 back, reducing the annual cost to £6,000. For a disabled child, the maximum government contribution doubles to £4,000 a year.
HMRC data reveals a growing trend: the number of families claiming for children aged eight and over has risen by more than 20% compared with the previous year. This suggests more parents are using the scheme to fund holiday clubs and wraparound school care, not just early years provision.
Widespread provider acceptance
Nearly 75,000 childcare providers across the UK are now signed up to accept Tax-Free Childcare payments, making it easier for families to use the funds. The scheme can be used alongside the government's funded childcare hours, provided families meet the relevant eligibility rules.
HMRC's call to action
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'."
Eligibility criteria
To qualify, you must have a child aged 11 or under (or 16 or under if they have a disability). Both you and your partner (if you have one) must each earn at least the equivalent of 16 hours a week at the National Minimum or Living Wage. Neither parent can earn more than £100,000 a year, and you must not be receiving Universal Credit or childcare vouchers.
Flexible account use
Parents can open an account for each eligible child and use the money immediately or leave it until needed. Any unused funds can be withdrawn at any time, offering flexibility for changing circumstances.
With summer holidays approaching and term-time care costs on the horizon, HMRC's reminder comes at a crucial time for families looking to manage their budgets. The scheme is open for applications now, and eligible parents are encouraged to act promptly to avoid missing out on the financial support available.
