Parents urged to check Tax-Free Childcare balances
More than £18m could be languishing in unused Tax-Free Childcare accounts, according to Royal London.
The insurer carried out a Freedom of Information request to find out the average unused balance in the accounts. It found the average unused balance before the lockdown on 9 March was £83.75 per account.
The latest quarterly statistics on the use of Tax-Free Childcare accounts show that 218,000 families used Tax-Free Childcare accounts in March, down from a high of more than 220,000 in January.
The decrease is due to nurseries, childminders and after school clubs being forced to close due to lockdown.
Tax-Free Childcare accounts offer a 25% Government top-up towards the cost of childcare for parents of under 12s. This means that for every £8 paid in by parents, a further £2 is added by the Government, up to a maximum top-up of £2,000 a year.
Payments to the accounts are made manually by parents, the top-up is added by the Government, then the parent pays their childcare provider.
Royal London says that as many parents are not currently using their usual childcare provision, they should check whether they have an unused balance in their Tax-Free Childcare account that they might wish to withdraw back into their current account.
Becky O’Connor, personal finance specialist at Royal London, says: “There were fewer parents paying for childcare using Tax-Free Childcare accounts in March, as nurseries and childminders closed their doors at the beginning of lockdown and children were required to stay at home.
“We are urging parents to check whether they have an unused balance in their tax-free childcare account. If they do not need to pay for childcare imminently, withdrawing any unused balance and putting back in their current accounts could help the family finances.”
Earlier this month is was confirmed that parents would still be eligible for 30 hours of free childcare if their income dropped below the minimum threshold as a result of coronavirus.
Parents feared they may no longer qualify for the scheme if they experienced a fall in income. To qualify for the scheme, each parent must work and earn a weekly minimum of the equivalent of 16 hours at national minimum wage or living wage (£139 per week), and less than £100,000 a year.