Are you missing out on Tax-Free Childcare?
HMRC recently announced over 500,000 families claimed tax-free childcare in the last year. That’s more than ever before. Yet, they estimate 1.3 million households may be eligible. With so many families missing out, could you be one of them?
Who is eligible for tax-free childcare?
You (and your partner, if you have one) must be in work and earning at least what you would if you worked 16 hours at the National Minimum Wage. You might still be eligible if you get Carers Allowance, Incapacity Benefit, or ESA.
Your child will need to be 11 or under, or 17 or under if they are disabled.
You must not be claiming Tax Credits or Universal Credit. These benefits will stop if you claim tax-free childcare. We would recommend speaking to an adviser before you claim, if you think you are better-off using tax-free or 30 hours free childcare.
You must also have the right to access public funds in the UK. If you have a Biometric Residence Permit, you will not be able to access tax-free childcare if it has a No Recourse to Public Funds condition on it. If you are unsure, always seek advice before claiming. Claiming a benefit you are not entitled to may mean you are in breach of your immigration conditions.
How does it work?
The first thing you will need to do is set up an online childcare account. Once this is set up, you can make payments into the account and the government will top-up any payments you make.
The top-up is worth 25% of what you pay in. So, for every £8 you pay in, the government will add £2. You can use the balance to pay for eligible childcare.
The maximum help you can get is £500 every three months, or £1000 every 3 months if your child is disabled. To qualify for the additional disable child amount, your child will need to receive either Disability Living Allowance or Personal Independence Payment.
I already get 30 hours of free childcare, can I open an online childcare account?
Yes, you can! You can claim both at the same time.
The application for 30 hours free childcare is the same as for tax-free childcare. So, if you apply for one, you’ll find out if you are eligible for the other as well.
If you are confident doing the application yourself, just follow this link to check your eligibility and set up your account.
I’m not eligible for tax-free childcare, or I claim Tax Credits/Universal Credit. Can I get help with childcare costs?
Both Working Tax Credit and Universal Credit have additional elements which can be added to help with childcare costs. The rules are a bit different for each so it is best to speak to an adviser if you want to know more or need help adding the element to your claim.
Depending on your child’s age and the benefits you receive, you might also be entitled to free childcare. For further information, including full advice on all your childcare options, please see our contact details below to find out how to get in touch with an adviser.
Can Citizens Advice help me set up an online childcare account?
Call your local Citizens Advice office to get help with this on 0800 144 8848.
Alternatively, email our HMRC team at email@example.com to request a callback. We can check your eligibility and help you set up the account.
Disclaimer: This information was correct at the time of publishing on 31 May 2022 and is provided as a guide only. It is not a recommendation to take a specific action and we suggest you speak to an adviser if you have any doubt about how the law applies to you.