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Increase in families using Tax-Free Childcare

Increase in families using Tax-Free Childcare
Paloma Kubiak
Written By:
Paloma Kubiak

Approximately 484,000 families used Tax-Free Childcare for 580,000 children in November, latest statistics from HMRC reveal.

These figures are up on the 456,000 families using the Government scheme for 547,000 children in September 2023.

However, HMRC noted account usage decreased in December to 440,000 families using their accounts for 523,000 children, “likely in part due to the school Christmas holidays”.

HMRC revealed the Government spent £46.2m on top-ups for families in December 2023, which is £4.7m higher than in December 2022.

Tax-Free Childcare

Tax-Free Childcare provides thousands of eligible working families with financial support towards the cost of their childcare.

For every £8 paid into a Tax-Free Childcare online account, families will automatically receive an additional £2 in Government top-up, and it is available for children aged up to 11, or 17 if the child has a disability.

Families receive up to £500 every three months, per child, or £1,000 if their child is disabled, helping towards the cost of before- and after-school clubs, childminders and nurseries, holiday clubs and other approved childcare schemes.

In the March 2023 Budget, the Government announced the “largest-ever expansion of free childcare”, offering up to 30 hours per week of funded term-time care to all children in working families in England from the age of nine months by September 2025.

The programme is expected to roll out in the following phases:

  • April 2024: Up to 15 hours for eligible working families in England with a two-year-old.
  • September 2024: Up to 15 hours for eligible working families in England with a child between nine and 23 months old.
  • September 2025: Up to 30 hours for eligible working families in England with a child from nine months old up to school age.

‘Families unaware of their eligibility’

Despite the expansion and the increase in numbers using the scheme, Neil Leitch, CEO of the Early Years Alliance, said: “The fact remains that a significant proportion of families still do not use the scheme”.

Leitch added: “Despite this policy now being in its seventh year, countless families are still unaware that they are eligible to receive support through the scheme – or that it exists at all. What’s more, it remains an entirely regressive policy, with parents with more disposable income receiving more financial support than those with less.

“At the time when early-years providers are being forced to increase fees due to sustained underfunding financially – and with the sector set to be put under even greater pressure when the early entitlements are expanded in a little over a month – it’s clear that the money used to finance Tax-Free Childcare would better benefit both families and providers if it was used to adequately fund early entitlement offers.”