HMRC update as Britons could get £2,000 to help with the cost of childcare – act now

Martin Lewis reminds parents to confirm tax-free childcare

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Tax-Free Childcare could help individuals to get up to £500 every three months – translatable as up to £2,000 per year – for each of their children to help with costs of childcare. This is a sum which could increase if a child is disabled – up to £4,000 per year. HMRC has said that in June 2021, approximately 308,000 families right across the UK benefitted from using the Tax-Free Childcare process. However, thousands of people are currently missing out on this opportunity, and will need to take action in order to rectify the situation. As children return to school, Tax-Free Childcare could assist parents and carers with additional costs which could easily rack up, such as breakfast and after school clubs which will resume this month following a weeks-long break over the summer holidays. 

Tax-Free Childcare is made available to eligible parents or carers who are responsible for looking after a child aged up to 11, or 17 if the child concerned is disabled – and the benefits of claiming this kind of support can be wide-ranging for those able to.

The service essentially works by helping out parents and carers for the money they deposit into their account. For every £8 Britons place here, they will be able to receive a top up from the Government worth £2 – up to the value of £500 every three months, or £1,000 if their child is disabled.

HMRC is issuing the reminder to families, as many have seen their personal circumstances change since March 2020, given the pandemic, and the subsequent return to work as restrictions across the country lift, and COVID-19 vaccinations become more commonplace.

The 20 percent top up which is available from the Government is paid into a person’s Tax Free Childcare account, with the Revenue stating it will be ready for parents and carers to make use of almost instantly, aiding the process of childcare.

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hmrc tax free childcare

HMRC: Update as Britons could get £2,000 to help with the cost of childcare (Image: Getty)

This could mean significant assistance towards childminders, breakfast and after school clubs, as well as approved play schemes – the cost of which can quickly rack up for parents who are returning to work, potentially after an extended period of time. 

Myrtle Lloyd, HMRC’s Director General for Customer Services, commented on the matter, and said: “As your children head back to school this autumn, don’t miss out on the opportunity to receive your 20 percent top-up to help pay for their childcare.”

Ms Lloyd stated it is a quick and easy process for Britons to be able to sign up, and they will be able to access Tax-Free Childcare by simply visiting the Government’s website to find out more information. 

Tax-Free Childcare is also made available to other children as well, so it is important to check the circumstances in which parents and carers can receive this kind of support. 


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Those who are pre-school age, attending nurseries, childminders and accredited childcare providers can also be claimed for, and parents and carers returning to work following a period of parental leave can also apply for Tax-Free Childcare ahead of time.

HMRC has explained families can deposit money 31 days before they return to work, which could help them to maximise the potential top-up available from the Government. 

It is worth noting, however, that childcare providers must be signed up to the scheme before Britons can pay them and benefit from the Tax-Free Childcare process, so individuals are encouraged to check whether the provider is signed up.

In the case of disabled children, the extra Tax-Free Childcare amount a person receives can be used to help pay for additional hours of childcare which may be required.

tax free childcare scheme

HMRC: Parents and carers could be aided by Tax-Free Childcare (Image: Getty)

The Government explains the additional sum can also be used to help pay childcare providers in order to procure specialist equipment for the child concerned, such as mobility aids. However, parents will need to talk to the provider about what equipment they are able to get in this regard.

Parents and carers will also be able to receive Tax-Free Childcare at the same time as 30 hours free childcare if they are eligible for both, and as a result, they should not worry about the removal of one or the other entitlement. 

Eligibility for Tax-Free Childcare is dependent on a number of different factors, which it is worth Britons considering before they decide to make a claim for this kind of support.

It will depend on:

  • If a person is working
  • A person’s income – and their partner’s, if they have one
  • The child’s age and circumstances
  • A person’s immigration status

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Those who are working will usually be able to get Tax-Free Childcare if they, and their partner if they have one, is in work, on sick leave, annual leave, shared parental leave, maternity, paternity or adoption leave. However those who are on adoption leave, cannot apply for the child they are on leave for.

The only exception to the rule which is imposed by HMRC is if a person is going back to work within 31 days of the date they first applied for Tax-Free Childcare.

For income purposes, individuals will need to expect to earn a certain amount within the next three months. This is usually at least the National Minimum Wage or Living Wage for 16 hours a week on average. If a person has a partner, they will also need to expect to earn at least this much as well.

The Government, though, has taken into account those who might be earning less temporarily due to the pandemic, for example, if they are on furlough or SEISS. Individuals may still be eligible for this support, and are encouraged to reach out to HMRC about the matter. 

Roy Walsh

Roy Walsh

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