Families urged to open a Tax-Free Childcare account and save up to £4,000 a year
Parents can reduce their annual childcare bill by up to £2,000 by saving in a Tax-Free Childcare account with HMRC.
Families can use their Tax-Free Childcare account to pay for any approved childcare including holiday clubs, breakfast and after school clubs, child minders and nurseries.
For every £8 paid into a Tax-Free Childcare account, families automatically receive the Government top up of £2. Families can save up to £500 every three months for each child or £1,000 if their child is disabled.
The scheme can save families up to £2,000 a year per child or £4,000 a year if their child is disabled.
Myrtle Lloyd, HMRC’s director general for customer services, said: “Starting back to school and arranging childcare for the term ahead can be costly for working families. Tax-Free Childcare offers financial help so families can save on the cost of childcare. Search Tax-Free Childcare on GOV.UK and sign up online today.”
How to open a Tax-Free Childcare account
Parents and carers could be eligible for Tax-Free Childcare if they:
- have a child or children aged up to 11, or a child with a disability up to the age of 16
- earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average
- each earn no more than £100,000 a year
- do not receive tax credits, Universal Credit or childcare vouchers
Opening a Tax-Free Childcare account can be done online in about 20 minutes.
Each eligible child requires their own Tax-Free Childcare account. If families have more than one eligible child, they need to register an account for each child. The Government top-up is then applied to deposits made for each child, not household.
Account holders must confirm their details are up to date every three months to continue receiving the Government top-up.
Money can be deposited at any time, to be used straight away or left in the account and used whenever it is needed. Unused money in the account can be withdrawn at any time.