Martin Lewis, the founder of MoneySavingExpert.com, has issued a timely warning to UK households, urging parents to claim the government’s Tax-Free Childcare bonus. Speaking on ITV’s This Morning, Lewis highlighted that more than 800,000 working families are missing out on up to £2,000 annually to help with the cost of childcare.
The money-saving expert has raised concerns over the misleading name of the scheme, stating that it should be called the “working families childcare top-up.” According to Lewis, the scheme is not related to tax or tax-free income, but is a government-funded initiative designed to ease the financial burden on parents who are paying for childcare.
A Simple Scheme With Significant Benefits
The Tax-Free Childcare scheme is a government-backed initiative aimed at providing financial relief to working families. Parents can receive up to £500 per quarter, equating to £2,000 per year for each child.
The system operates by matching a portion of the funds parents deposit into a dedicated tax-free childcare account. For every £80 a parent contributes, the state adds an additional £20. This amount can be used to pay for a variety of childcare services, including nursery care, childminders, and after-school clubs.
According to Lewis, the scheme has already helped millions of families, yet an alarming number of eligible parents are not claiming the benefit.
He estimates that approximately 825,000 out of 1.3 million eligible families are missing out on the financial support. He is now campaigning to rename the scheme, calling it the “working families childcare top-up” to make its purpose clearer to the public.
Eligibility and Criteria
While the Tax-Free Childcare scheme offers significant financial assistance, it is important to note that not all families qualify. To be eligible, parents must meet certain criteria.
First, the child in question must be aged 11 or younger, unless they have a disability, in which case the age limit extends to 16. Additionally, parents must be working and earning at least the equivalent of 16 hours a week at the national minimum wage. For example, a person aged 21 or above must earn at least £10,000 per year.
Furthermore, families cannot claim the bonus if they are already receiving Universal Credit or childcare vouchers, as the scheme offers an alternative support structure for those families. However, for eligible parents, the benefits of this scheme are clear.
The £2,000 annual bonus can help significantly reduce the financial burden of childcare, making it an essential resource for working families.
