His Majesty’s Revenue and Customs (HMRC) is urging working parents earning less than £100,000 per year to check their eligibility for Tax-Free Childcare, a government scheme that could save families up to £4,000 annually. As reported by Express.co.uk, millions of eligible parents may be missing out on crucial financial support that helps cover the rising costs of childcare.
Tax-Free Childcare is designed to support parents who are not eligible for Universal Credit, Working Tax Credit, or Child Tax Credit. Under the scheme, parents can receive up to £500 per month per child, amounting to £2,000 per year for each child under 11 years old. For parents of disabled children, the support doubles to £1,000 every three months, reaching a maximum of £4,000 per year.
Who Can Claim Tax-Free Childcare?
The Tax-Free Childcare scheme is open to parents who meet specific eligibility criteria. To qualify, an applicant must:
- Be in paid work and earn at least £2,379 over three months if aged 21 or over.
- Have an adjusted net income below £100,000.
- Have a child under 11 years old (or 16 if the child is disabled).
For parents who are self-employed and have started their business within the last 12 months, the income requirement is lower, making it easier for them to qualify for support. This provision aims to help entrepreneurs and freelancers who may have irregular earnings during the early stages of their business.
HMRC is encouraging parents to apply as soon as possible, as support continues until September 1 following the child’s 11th birthday or 16th birthday for disabled children.
How Can Families Use This Benefit?
The money provided through Tax-Free Childcare can be used to pay for a range of approved childcare services, including:
- Registered childminders
- Day nurseries and preschools
- After-school clubs and holiday schemes
- Nannies and home-based carers
For parents of disabled children, the funding can also go towards specialist equipment required by childcare providers, such as mobility aids or additional support hours. This ensures that children with disabilities receive the care they need, while reducing financial pressure on families.
Who Is Not Eligible for Tax-Free Childcare?
While millions of families may qualify, certain parents will not be eligible if they receive:
- Universal Credit
- Working Tax Credit
- Child Tax Credit
- Childcare Vouchers
This is because these benefits already include childcare support, and the government does not allow families to claim both Tax-Free Childcare and other childcare-related benefits at the same time.
However, parents who are not currently working may still be eligible if their partner is employed and they receive certain benefits, such as:
- Carer’s Allowance
- Incapacity Benefit
- Severe Disablement Allowance
- Contribution-based Employment and Support Allowance (ESA)
- National Insurance credits due to incapacity for work
Additionally, parents who are starting or returning to work within the next 31 days may also apply, ensuring they receive support as soon as they begin earning.
How to Apply and When to Claim
HMRC is urging families to apply online via the Childcare Choices website, where parents can check their eligibility and begin the application process. Once approved, the scheme allows parents to deposit money into an online childcare account, with the government topping up every £8 deposited with an additional £2, up to the maximum benefit amount.
For families already using the 30 hours of free childcare scheme for working parents, Tax-Free Childcare can be combined with it, helping reduce costs even further.
