Martin Lewis tip to save £2,000 a year in just 30 minutes | Personal Finance | Finance

Martin Lewis has shared a tip that can save eligible households up to £2,000 per year, and it only takes around 30 minutes to do.

Working parents are urged to apply for the government’s Tax-Free Childcare scheme to help cover childcare costs, such as nurseries, childminders, nannies and after-school clubs. Through the scheme, HMRC will provide parents up to £500 every three months for each child under the age of 11, amounting to a maximum of £2,000 per year. This amount rises up to £1,000 every three months if a child is disabled, giving parents up to £4,000 annually towards approved childcare.

Parents with disabled children can use the cash to pay for extra hours of childcare, as well as childcare providers so they can get specialist equipment that may be required, like mobility aids.

According to the Money Saving Expert (MSE) founder, it takes roughly 30 minutes to apply for the scheme online and around 800,000 parents are currently missing out on this help, so it’s worth signing up if you’re eligible to help ease the burden of childcare costs.

Martin shared the tip in this week’s MSE email, stating: “Typical saving: 20% of childcare costs, up to £2,000/yr per child. Rough time to do: 30 mins.

“Key action: If you pay for childcare, check if you’re eligible for the poorly named Tax-Free Childcare scheme, where working parents earning under £100,000/yr can get a 25% boost on what they pay (up to £2,000/yr per child, or £4,000 for a child with disabilities).

“Call to arms: Around 800,000 parents are missing out on this key help, and with childcare prices a huge burden that can often put people off going back to work, it’s well worth a check.

“There’s also up to 30hrs ‘funded’ nursery time for some aged 9mth to 4yrs (depending on which UK nation you’re in) and childcare help for those on Universal Credit.”

Parents need to be at least 16 years old, be in qualifying paid work and not have an expected ‘adjusted net income’ over £100,000 to be eligible for Tax-Free Childcare. HMRC says over the next three months, parents must each expect to earn at least:

• £2,539.68 before tax if you’re aged 21 or over (equivalent to £195.36 per week)
• £2,080 before tax if you’re aged 18 to 20 (equivalent to £160 per week)
• £1,570.40 before tax if you’re under 18 or an apprentice (equivalent to £120.80 per week)

This is the National Minimum Wage or Living Wage for 16 hours a week on average over a period of three months. Those who are self-employed and started their business less than 12 months ago can earn less and still be eligible for Tax-Free Childcare.

Parents won’t be eligible if they are in receipt of any of the following benefits:

• Working Tax Credit
• Child Tax Credit
• Universal Credit
• Childcare Vouchers

If you’re not currently working, you may still be eligible if your partner is working, and you get any of the following:

• Incapacity Benefit
• Severe Disablement Allowance
• Carer’s Allowance or (in Scotland only) Carer Support Payment
• contribution-based Employment and Support Allowance
• National Insurance credits on the grounds of incapacity for work or limited capability for work

You can apply if you’re starting or re-starting work within the next 31 days and if eligible, you can receive Tax-Free Childcare for your child until September 1 after their 11th birthday, or until September 1 after their 16th birthday if they are disabled.

You can also claim Tax-Free Childcare alongside 30 hours for working parents. Applications can be made online via the Childcare Choices website.