Parents may be overlooking the opportunity to benefit from tax-free childcare valued at up to £2,000 annually, which can be utilized during the summer break. Tax-free childcare involves an online account where the government matches £2 for every £8 deposited, earmarked for childcare expenses.
Eligible individuals can receive up to £500 every three months, totaling £2,000 per year for each child. The allowance is higher for disabled children, with a maximum of £1,000 every three months (£4,000 annually).
Opening a tax-free childcare account is free and can be done through the GOV.UK website in approximately 20 minutes. Children under 11 years old who reside with the claimant are eligible for tax-free childcare benefits until September 1 after their 11th birthday, or until September 1 after their 16th birthday for disabled children.
To qualify for a tax-free childcare account, individuals must earn at least the minimum wage for 16 hours per week, and their adjusted net income should not exceed £100,000. Exceptions exist for those who have been self-employed for less than 12 months or are in specific non-working situations.
Funds from the tax-free childcare account must be used at registered childcare providers like nurseries, nannies, and after-school clubs. Additionally, parents may be entitled to 15 or 30 hours of free childcare weekly, depending on their child’s age.
Parents of nine-month-olds and two-year-olds who are employed can access 15 hours of free childcare weekly, which will increase to 30 hours by September 2025. Three and four-year-olds are entitled to 15 hours of free childcare weekly, with working parents meeting earnings criteria eligible for the full 30 hours.
Moreover, parents claiming Universal Credit while employed can reimburse up to 85% of childcare costs, up to a maximum of £1,031.88 for one child or £1,768.94 for two or more children.
