Three month rule could see your Tax Free Childcare allowance cut

Millions of working parents could be missing out on up to £2,000 per child each year through the Tax-Free Childcare scheme

Millions of households across the UK could be entitled to reclaim as much as £2,000 from HM Revenue and Customs (HMRC) this year, although the scheme comes with a three-month warning. The tax authority runs a programme which means numerous families earning under £100,000 may be eligible for the government support.

Tax-Free Childcare works by assisting families in reducing spending on childcare costs for working parents. In addition to earning below the threshold stated, you will be eligible if you have a child aged under 11, or 16 if your child is disabled.

You can use the discount to pay for school clubs, childminders and other wraparound care. It is worth as much as £2,000 per child each year, or up to £4,000 if your child is disabled.

Once you have signed up for tax-free childcare, the government will contribute £2 for every £8 you pay into your online account. According to Gov.uk: “You can get Tax-Free Childcare at the same time as 15 or 30 hours free childcare if you’re eligible for both” and it also explains that this benefit applies to a range of childcare services including after-school clubs, childminders, nurseries, and nannies.

The childcare provider must be registered on the scheme for you to make payments and claim the top-ups. For parents of disabled children, the extra funds from Tax-Free Childcare can be used to pay for additional childcare hours and to help providers acquire specialist equipment needed by your child, such as mobility aids, reports the Mirror.

Your eligibility for tax-free childcare depends on a number of factors, including your employment status, earnings, your child’s age and circumstances, and your immigration status. According to HMRC, you can generally access the scheme if you are in employment, on sick or annual leave, or on shared parental, maternity, paternity or adoption leave, provided you are due to return to work within 31 days of the date you initially applied.

Even if you are not currently in work, you may still be eligible if your partner is employed and you receive Severe Disability Allowance, Incapacity Benefit, Carer’s Allowance, Carer Support Payment (Scotland only) or contribution-based Employment and Support Allowance.

Regardless of your circumstances, however, if you wish to continue receiving support, you must reconfirm that your details are up to date with HMRC once every three months. Failing to do so will result in the government halting any further payments into your Tax-Free Childcare account.