His Majesty’s Revenue and Customs (HMRC) is urging working parents earning less than £100,000 per year to claim a benefit that could give them up to £4,000 more annually.
Tax-free childcare is a benefit that provides parents who aren’t eligible for Tax Credits or Universal Credit with help towards childcare costs. The government scheme provides up to £500 every month for each child under the age of 11, amounting to a maximum of up to £2,000 per year. But this amount rises up to £1,000 every three months if a child is disabled, giving eligible parents up to £4,000 annually towards childcare.
The money can be used to pay for approved childcare, which includes childminders, nurseries, nannies, after school clubs and play schemes.
For parents with disabled children, the cash can go towards paying for extra hours of childcare as well as to help pay childcare providers so they can get specialist equipment that may be required, like mobility aids.
HMRC has issued a message to parents to check their eligibility for the benefit in a post on X (formerly Twitter), as it could save them thousands of pounds per year.
The government departments said: “Tax-Free Childcare can help you save money on childcare costs if you’re a working parent with a child under 11 (or 16 if your child is disabled) and you earn under £100,000 a year. Find out what help you can get here.”
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:
- £2,379 if you’re aged 21 or over
- £1,788 if you’re aged 18 to 20
- £1,331 if you’re under 18 or an apprentice
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 if you’re starting or re-starting work within the next 31 days and if eligible, you can receive Tax-Free Childcare for your child until September 1 after their 11th birthday, or until September 1 after their 16th birthday if they are disabled.
You can also claim Tax-Free Childcare alongside 30 hours for working parents. Applications can be made online via the Childcare Choices website.
