HMRC warning as thousands of families missing out extra £4,000 a year
HMRC has issued a warning as families could be missing out on childcare support worth up to £4,000 each year.
The tax office has urged families to take advantage of the Government's tax-free childcare scheme, particularly as Easter is only a few weeks away. According to recent data, around 1.3 million families are eligible, but around 800,000 aren't currently using this benefit.
The childcare scheme is an online account which parents and guardians pay into, and then they receive a top up payments from the Government. For every £8 you pay into the account, the Government will automatically add in £2 which you can put towards your childcare costs. Childcare allowed under the scheme must be a registered provider such as nurseries, nannies, after school clubs and play schemes.
The scheme helps pay for childcare for children up to the age of 11 years, or up to 16 if the child has a disability. If you’re eligible, you can get up to £500 every three months - up to £2,000 a year - for each of your children. If your child is disabled you could receive £1,000 or up to £4,000.
To be eligible for the scheme, you must earn at least the minimum wage, for the equivalent of 16 hours a week. If you're in a couple, your partner must also earn this. Self-employed workers are also eligible if they earn this amount too. Both you and your partner also have to earn less than £100,000 a year to qualify.
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This scheme is open to working families so you will not be able to get this help if you are claiming Tax Credits, Universal Credit or childcare vouchers. However, there are some exceptions for those who are not working. For example, you may still be able to claim if one of you is working and the other gets Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or Employment and Support Allowance (ESA).
HMRC says it takes around 20 minutes to apply for the scheme and you can do this through the Gov.uk website. Once an account is opened, parents can deposit money immediately, so it is ready to be used whenever it is needed; and unused money in the account can be withdrawn at any time.
Going forward, you will need to make sure the detail on the account are up to date every three months to keep receiving the Government top ups.
Myrtle Lloyd, HMRC’s director general for customer services, said: "Springtime is a good opportunity to take a fresh look at family finances. A quick check online and you can find out how Tax-Free Childcare can help cut the cost of your childcare bills. Every bit of financial support helps – I would urge families to ’hop to it’ and search ‘Tax-Free Childcare’ on GOV.UK to find out how you could be better off and open your account today.”
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