Parents may need to act soon (Image: monkeybusinessimages via Getty Images)
Millions of UK households could reclaim as much as £2,000 from HM Revenue and Customs (HMRC) this year, though the scheme carries a three-month warning.
The tax authority runs a programme whereby many earning under £100,000 may be eligible for the government support.
Tax-Free Childcare works by helping families cut expenditure on childcare costs for working parents. Alongside earning below the threshold mentioned, you’ll qualify if you have a child aged under 11, or 16 if your child has a disability.
The discount can be used to cover school clubs, childminders and other wraparound care. It’s worth up to £2,000 per child annually, or up to £4,000 if your child is disabled.
Upon registering for Tax-Free Childcare, the government will contribute £2 for every £8 you deposit into your online account.
As outlined on Gov.uk: “You can get Tax-Free Childcare at the same time as 15 or 30 hours free childcare if you’re eligible for both” and it further clarifies that this benefit extends to various childcare services including after-school clubs, childminders, nurseries, and nannies.
Your childcare provider must be enrolled in the scheme for you to process payments and claim the top-ups.
For parents of disabled children, the additional funds from Tax-Free Childcare can be used to pay for extra childcare hours and to assist providers in obtaining specialised equipment required by your child, such as mobility aids.
Read more: Reeves HMRC tax allowance cut alert as new advice rules begin
Read more: HMRC ‘ast minute’ warning for Brits as ‘one week to prepare’
Your eligibility for tax-free childcare depends on a number of factors, including your employment status, earnings, your child’s age and circumstances, and your immigration status.
According to HMRC, you can generally access the scheme if you’re in employment, on sick or annual leave, or on shared parental, maternity, paternity or adoption leave, and you’re returning to work within 31 days of the date you first applied.
Even if you’re not currently in employment, you may still qualify if your partner is working and you receive Severe Disability Allowance, Incapacity Benefit, Carer’s Allowance, Carer Support Payment (Scotland only) or contribution-based Employment and Support Allowance.
Regardless of your circumstances, however, if you wish to continue claiming, you must confirm your details are up to date with HMRC every three months. Failing to do so will result in the government halting any payments into your Tax-Free Childcare account.