The UK's tax authority is making a fresh push to encourage families to take advantage of a significant financial support scheme. HM Revenue and Customs (HMRC) is urging people who are not claiming two specific Department for Work and Pensions (DWP) benefits to apply for Tax-Free Childcare, a perk that can be worth up to £2,000 per child every year.
How the Tax-Free Childcare Scheme Works
This government initiative is designed to help working parents with the substantial costs of childcare. The process involves setting up an online childcare account. For every £8 that a parent pays into this account, the government adds a £2 top-up. This means families can receive up to £500 every three months for each child, which totals the £2,000 annual maximum.
The support is even greater for parents of disabled children. In these cases, the government top-up can reach £1,000 every three months, providing up to £4,000 of support per year. The money in the account is then used directly to pay for childcare with a registered provider.
Key Eligibility Rules and Important Exclusions
To qualify, applicants must usually be in work, and their child must be 11 years old or younger, or 16 or younger if disabled. Income and immigration status are also assessed as part of the application.
A crucial rule highlighted by HMRC is that you cannot receive Tax-Free Childcare at the same time as claiming Universal Credit or receiving childcare vouchers through an employer scheme. This is a key point for many families to consider.
If you are applying and currently use childcare vouchers, you must inform your employer to stop them within 90 days of your Tax-Free Childcare application. HMRC also advises waiting for a decision on your new application before cancelling any existing Universal Credit claim.
Act Now to Secure Your Entitlement
In a recent post on the social media platform X, HMRC used a festive theme to prompt action, stating: “Don't leave Tax-Free Childcare at the bottom of your Christmas to do list! Unlock a festive cash boost and check if you could save up to £2,000 per child today!”
Before applying, parents must ensure their chosen childcare provider is officially signed up to the Tax-Free Childcare scheme. Taking a few minutes to check eligibility could result in thousands of pounds of extra support for hard-working families across the country.
