Tax-free childcare, are you missing out?

With childcare costs continuing to rise, many working families could be missing out on valuable support through the Tax-Free Childcare scheme. The scheme helps eligible parents pay for registered childcare by providing a government top-up on their contributions. For every £8 paid into a childcare account, the government adds £2.

Tax-Free Childcare can be used to pay for a range of approved childcare providers, including childminders, nurseries, nannies, after-school clubs and holiday clubs. The government contribution is capped at £500 every three months, providing up to £2,000 a year per child. For children with disabilities, the maximum increases to £1,000 every three months, or £4,000 a year.

The scheme is available to many working parents, including those who are self-employed. You will usually need to be working, or returning to work, and earning at least the equivalent of the National Minimum Wage or Living Wage for 16 hours a week. Both employed and self-employed workers can qualify, as well as those on certain types of leave, including maternity, paternity and adoption leave.

Children are generally eligible until 1 September after their 11th birthday, or until 1 September after their 16th birthday if they are disabled.

However, there are restrictions. You cannot usually claim Tax-Free Childcare if you or your partner’s expected adjusted net income is more than £100,000 a year, or if you receive Universal Credit or childcare vouchers. Parents must set up a childcare account and sign-in every 3 months to confirm they remain eligible.