The average household enrolled in the scheme saves close to £100 every month according to HMR
Thousands of working parents across Wales are being urged to take a fresh look at a Government scheme which, HMRC says, could cut monthly bills by close to £100. The reminder has been issued as families juggle summer childcare and start planning for the next school term, when costs can rise again through wraparound care.
HM Revenue & Customs says many households could be eligible but still haven’t opened an account. HMRC this week highlighted Tax-Free Childcare, a scheme designed to help cover the cost of nurseries and registered childminders, as well as breakfast clubs, after-school provision and holiday clubs. Families who qualify can receive a Government top-up towards approved childcare, giving budgets a boost during the school holidays and through the year. The tax break can be used flexibly, depending on what childcare you need and when.
Under Tax-Free Childcare, eligible families can get up to £2,000 a year per child, rising to £4,000 for a disabled child, by opening a dedicated account. The way it works is simple: for every £8 parents pay in, the Government adds £2 – effectively a 25% top-up towards approved childcare costs.
That means families can receive up to £500 in Government top-ups every three months for each child, or £1,000 every three months if the child is disabled. HMRC said almost 75,000 childcare providers are now registered to accept Tax-Free Childcare payments.
New figures also suggest more parents of older children are using the scheme. HMRC said the number of families using Tax-Free Childcare for children aged eight and over has increased by more than 20% compared with a year earlier.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said: “Tax-Free Childcare can help with your summer childcare plans and, looking to the term ahead, with whatever type of care you require for your child. If you haven’t signed up already, do it today so you don’t miss out. Go to GOV.UK and search ‘Tax-Free Childcare’.”
Parents can pay into the account and spend it straight away, or leave money there until bills are due. If you don’t end up needing it, any unused funds can be withdrawn.
Who can claim?
Working families may qualify if:
- They have a child aged 11 or under (or under 16 if the child is disabled).
- Each parent earns at least the equivalent of 16 hours a week at the National Minimum or Living Wage on average.
- Neither parent earns more than £100,000 a year.
- They are not receiving Universal Credit or childcare vouchers.
The scheme can also be used alongside the Government’s funded childcare hours, as long as families meet the eligibility rules for both. With childcare remaining one of the biggest pressures on household budgets, HMRC is urging families who think they might qualify to check before the new school term begins. More information here.
