You are here: Home - Household Bills - News -

Use of Tax-Free Childcare on the up

Written by: Emma Lunn
About 282,000 families used Tax-Free Childcare for 329,000 children in March 2021, compared with 248,000 families using childcare for 287,000 children in December 2020.

This increase in Tax-Free Childcare use continues the recovery from the impact of the first coronavirus lockdown which started in March 2020. The government spent £33.3m on top-up for families in March 2021, £7.6m more than in December 2020.

Tax-Free Childcare accounts offer a 20% government top-up towards the cost of childcare for parents of under 12s. To benefit parents must set up an account via

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. For disabled children the maximum is £4,000 per year.

You can then use the account to pay for your childcare, providing your childcare provider is registered to accept payments from the scheme. You can only pay out for childcare where the main reason for it is to enable you to work.

Myron Jobson, personal finance campaigner at Interactive Investor, said: “The closure of schools during the government enforced coronavirus lockdowns resulted in a struggle for many working parents to access childcare at a time where they needed it the most. A wail from child in the background of work-related video conferencing calls became an all too familiar and accepted by-product of the working from home phenomenon.

“The uptake of tax-free childcare initiative reflects this – decreasing in the first few months of the quarter before spiking towards March when children were allowed to return to classrooms.

“The Tax-Free Childcare scheme is a great money saver for eligible parents, effectively offering 20% off childcare so you’re not going to get it from pre-tax income. However, it continues to fall far below original estimates. Greater promotion of the initiative is still needed to raise awareness while encouraging even more parents to apply.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week