Boost your childcare budget this half term

Families looking for childcare places during February half term could be missing out on a government top-up to help pay their childcare bill.

As the February half term draws closer, families are being reminded that they can save up to £2,000 a year on childcare costs with Tax-Free Childcare. More than 401,300 families used the scheme in September 2022 and benefitted from the government paying towards childcare costs.

HM Revenue and Customs (HMRC) is encouraging families to find out more about Tax-Free Childcare and to check their eligibility via Childcare Choices.

Tax-Free Childcare can help working families pay for any approved childcare for children aged 11 or under, or, 16 if the child has a disability – whether the child goes to nursery, a childminder, attends breakfast or after school club, has holiday care or goes to an out of school activity.

For every £8 paid into an online account, families will automatically receive an additional £2

For every £8 paid into an online account, families will automatically receive an additional £2 from the government. Parents can receive up to £500 every 3 months (£2,000 a year), or £1,000 (£4,000 a year) if their child is disabled.

Opening a Tax-Free Childcare account is simple and takes around 20 minutes. Money can be deposited at any time and can be used straight away, or whenever it is needed. Unused money in the account can be withdrawn at any time. Register and get started.

Victoria Atkins, Financial Secretary to the Treasury:

Tax-Free Childcare can make a big difference to household budgets and I urge families to make sure they are getting the help they are entitled to.

It is a simple process – go online today, set up an account and start making real savings on your childcare costs.

Myrtle Lloyd, HMRC’s Director General for Customer Services:

We want to help working families and by using Tax-Free Childcare, they can use the government top-up to make their money go further. Search ‘Tax-Free Childcare’ on GOV.UK to find out how it could help you.

Families could be eligible for Tax-Free Childcare if they:

  • have a child or children aged 11 or under. They stop being eligible on 1 September after their 11th birthday. If their child has a disability, they may get up to £4,000 a year until 1 September after their 16th birthday
  • earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average
  • each earn no more than £100,000 per annum
  • do not receive tax credits, Universal Credit or childcare vouchers

A full list of the eligibility criteria is available.

Families can learn more about the childcare offers available to them and what support they’re entitled to by visiting Childcare Choices.

The government is offering help for households. Check to find out what cost of living support, including help with childcare costs, families could be eligible for.

More information about Tax-free Childcare

More information about Tax-Free Childcare and how to register.

Latest Tax-Free Childcare statistics were released on 16th November 2022. Data is available up to September 2022.

More than 401,300 families in the UK saved on their childcare costs with Tax-Free Childcare in September 2022, an increase of over 85,000 from the previous year, with each family receiving a share of the £44.4 million in government top-up payments.

HMRC has produced a refreshed Tax-Free Childcare guide for parents, which explains the reasons and benefits for signing up to the scheme.

Each eligible child requires their own Tax-Free Childcare account. If families have more than one eligible child, they will need to register an account for each child. The 20% government top-up is then applied to deposits made for each child, not household.

Account holders must confirm their details are up to date every three months to continue receiving the government top-up.

Childcare providers can also sign up for a childcare provider account to receive payments from parents and carers via the scheme.

PAYadvice.UK 3/2/2023

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