Parents in the UK are being encouraged to check their eligibility for financial support that could amount to as much as £2,000 annually for childcare costs. HM Revenue and Customs (HMRC) has issued an alert, urging families to explore whether they qualify for the Tax-Free Childcare programme. This initiative aims to alleviate the financial strain associated with childcare expenses.
In a recent message on the social media platform X, HMRC posed the question, “Could you be missing out on childcare savings?” The agency highlighted the benefits of signing up for Tax-Free Childcare, which allows qualifying couples to save up to £2,000 per year for each child on approved childcare costs.
Eligibility for this funding is restricted to couples whose combined income does not exceed £100,000 per year. Families meeting this criterion can receive £500 every three months for each child, totalling £2,000 annually. For families with children who have disabilities, the financial support increases to £1,000 every quarter, translating to £4,000 per year.
How to Access Tax-Free Childcare Funds
To access these funds, families must establish an online childcare account for their child. For every £8 deposited into this account, the government contributes an additional £2 to help pay childcare providers. This initiative can be claimed alongside 30 hours of free childcare available through the Free Childcare for Working Parents scheme, provided families meet the requirements for both programmes.
The funds can be utilized for various approved childcare expenses, including payments for childminders, nurseries, nannies, after-school clubs, and play schemes. If a child has a disability, the additional Tax-Free Childcare funds can cover extra hours of care or pay for necessary specialist equipment, such as mobility aids.
Eligibility Criteria for Tax-Free Childcare
To qualify for Tax-Free Childcare, parents (and their partners, if applicable) generally must be:
– In employment
– On sick leave or annual leave
– On shared parental, maternity, paternity, or adoption leave
Even if a parent is not currently employed, eligibility may still apply if their partner is working and they receive specific benefits, such as:
– Incapacity Benefit
– Severe Disablement Allowance
– Carer’s Allowance (or Carer Support Payment in Scotland)
– Contribution-based Employment and Support Allowance
Both parents must expect to earn at least the following amounts over the next three months:
– £2,539.68 before tax if aged 21 or older (equivalent to £195.36 per week)
– £2,080 before tax if aged 18 to 20 (equivalent to £160 per week)
– £1,570.40 before tax if under 18 or an apprentice (equivalent to £120.80 per week)
Self-employed individuals who have been in business for less than a year may also qualify, even if their earnings fall below these thresholds. Importantly, if either parent has an expected “adjusted net income” exceeding £100,000 in the current tax year, they will not be eligible for this support.
GOV.UK stipulates that children must be 11 years old or under and typically live with the applicant to qualify for the programme. Eligibility ceases on September 1 following the child’s 11th birthday. Adopted children qualify, while foster children do not. For children with disabilities who live with their families, assistance may continue up to £4,000 annually until the child turns 16.
For further information and to check eligibility, families can visit the official government website.
