HMRC will provide up to £500 every three months for each child under the age of 11 (Image: Getty)
HM Revenue and Customs (HMRC) is urging working parents earning less than £100,000 per year to “sign up” for a benefit worth up to £2,000 annually.
Working parents can apply for the Government’s Tax-Free Childcare scheme to help cover childcare costs, such as nurseries, childminders, nannies, and after-school clubs. Through the scheme, HMRC will provide parents up to £500 every three months for each child under the age of 11, amounting to a maximum of £2,000 per year. This amount rises up to £1,000 every three months if a child is disabled, giving parents up to £4,000 annually towards approved childcare. Parents with disabled children can use the cash to pay for extra hours of childcare, as well as childcare providers so they can get specialist equipment that may be required, like mobility aids.
According to Money Saving Expert (MSE) founder Martin Lewis, it takes roughly 30 minutes to apply for the scheme online and around 800,000 parents are currently missing out on this help, so it’s worth signing up if you’re eligible to help ease the burden of childcare costs.
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HMRC issued a reminder to parents at the end of last year to sign up for the scheme so they can make huge savings on childcare.
Writing in a post on X (formerly Twitter) in November, HMRC said: “Could you be missing out on childcare savings? Here’s what you need to know! Sign up for Tax-Free Childcare and save up to £2,000 a year per child on approved childcare costs.”
HMRC added: “You may be eligible to get up to £500 every three months (£2,000 per year) per child. If your child is disabled this increases to £1,000 every three months (£4,000 per year) per child.
“You can use it to pay for approved childcare costs, for example: childminders, nurseries, after school clubs, nannies. Check your eligibility by searching Tax-Free Childcare on GOV.UK for more information.”
Parents need to be at least 16 years old, be in qualifying paid work and not have an expected ‘adjusted net income’ over £100,000 to be eligible. HMRC says over the next three months, parents must each expect to earn at least:
- £2,539.68 before tax if you’re aged 21 or over (equivalent to £195.36 per week)
- £2,080 before tax if you’re aged 18 to 20 (equivalent to £160 per week)
- £1,570.40 before tax if you’re under 18 or an apprentice (equivalent to £120.80 per week)
This is the National Minimum Wage or Living Wage for 16 hours a week on average over a period of three months. Those who are self-employed and started their business less than 12 months ago can earn less and still be eligible for Tax-Free Childcare.
Parents won’t be eligible if they are in receipt of any of the following benefits:
- Working Tax Credit
- Child Tax Credit
- Universal Credit
- Childcare Vouchers
If you’re not currently working, you may still be eligible if your partner is working, and you get any of the following:
- Incapacity Benefit
- Severe Disablement Allowance
- Carer’s Allowance or (in Scotland only) Carer Support Payment
- Contribution-based Employment and Support Allowance
- National Insurance credits on the grounds of incapacity for work or limited capability for work
You can apply for the scheme at any time unless you’re starting or re-starting work, or you’re on maternity, paternity, shared parental or adoption leave. If you’re starting or returning to work, you can apply from the following the dates:
- Between May 1 and September 30 – apply from April 1
- Between October 1 and January 31 – apply from September 1
- Between February 1 and April 30 – apply from January 1
You can also claim Tax-Free Childcare at the same time as 30 hours of free childcare through Free Childcare for Working Parents if you’re eligible for both.
