Are you “missing out” on thousands of pounds in tax relief to help with the cost of childcare?

Thousands of working parents could be “missing out” on up to £2,000 a year to help with the cost of childcare, HM Revenue & Customs (HMRC) has revealed.

The Tax-Free Childcare scheme allows families to claim tax relief to pay towards the cost of holiday clubs, before and after-school clubs, childminders and nurseries, and other accredited childcare schemes.

How does it work?

For every £8 you pay into your Tax-Free Childcare account, the government will pay in £2 to use to pay your provider.

Taxpaying parents can get up to £500 every three months per child, or £1,000 every three months if a child is disabled, up to a maximum £2,000 or £4,000, respectively.

Your child must be aged 11 or under and “usually” live with you. They stop being eligible on 01 September after their 11th birthday.

Disabled children qualify until they’re 17.

What can I use Tax-Free Childcare funds for?

You can use it to pay for approved childcare, such as childminders, nurseries and nannies, after school clubs, and play schemes.

Am I eligible?

To claim Tax-Free Childcare, you will need to expect to earn a certain amount over the next three months. This is at least the National Minimum Wage (NMW) or Living Wage (NLW) for 16 hours a week on average.

If you have a partner, they’ll need to expect to earn at least this much too.

If you or your partner have an expected ‘adjusted net income’ over £100,000 in the current tax year - including any bonuses you expect to get - you will not be eligible.

Get advice today

For help and advice with related matters, please get in touch with our team today.