300,000 UK households urged to claim ‘no-brainer’ £2,000 payment | Personal Finance | Finance
The government’s Tax-Free Childcare scheme is worth up to £2,000 per year (Image: Getty)
Three thousand households across the UK are being urged to claim a ‘no-brainer’ payment worth up to £2,000 per year.
The money comes from the Government’s Tax-Free Childcare scheme, which provides working families with top-up payments to help with the cost of paying for childcare. For every £8 that is paid into a Tax-Free Childcare account, the Government will top it up by £5. The total top-up families can get for each child under the age of 11 is £500 every three months, which works out 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.
Martin Lewis’ MoneySavingExpert (MSE) has warned that 300,000 eligible UK households are missing out on this £2,000 per year top-up and said for those who qualify, it’s “a no-brainer” to sign up.
In the latest MSE money tips email, it said: “300,000 homes miss out on up to £2,000/yr via the ‘Working Family Childcare Top-up’ scheme.
“You won’t have heard of this, because we made the name up. It’s what we campaign for the formally titled ‘Tax-Free Childcare’ scheme to be called, as its real name is misleading and confusing: it has little to do with tax, and isn’t tax-free.
“In reality, it’s a top-up to help working families pay for childcare. The worry is that the confusing name is one of the reasons 300,000 eligible families still don’t claim it. So if you’re not on UC [Universal Credit], this is worth a look.”
To be eligible for the top-up, 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. If you claim either Universal Credit or childcare vouchers, you cannot get Tax-Free Childcare at the same time.
The Government says over the next three months, parents must each expect to earn at least:
£2,256.80 before tax if you’re aged 18 to 20 (equivalent to £173.60 per week)
£1,664 before tax if you’re under 18 or an apprentice (equivalent to £128 per week)
This is the National Minimum Wage or Living Wage for 16 hours a week on average. 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:
If you’re not currently working, you may still be eligible if your partner is working, and you get any of the following:
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
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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.
MSE added: “If you’re eligible and your childcare provider takes payments from Tax-Free-Childcare (ask it), it’s a no-brainer.”
