The Money Saving expert has highlighted the £2k Government benefit that a huge chunk of eligible parents are missing out on – he’s also revealed how to claim it
Martin Lewis has warned that 800,000 people are missing out on £2000 government benefit that can be used to reduce childcare costs.
The Government program, which confusingly has been called the ‘Tax-Free Childcare’ scheme, offers parents up to £2000 per year per child to put towards childcare costs, including nurseries, childminders, and even a number of holiday camps. The Money Saving Expert explains: “Tax-Free Childcare is appallingly named, don’t let it confuse you. Calling the scheme Tax-Free Childcare was a political spin to ensure government gets credit for the scheme.
“Unfortunately the name is appallingly misleading, and probably partly responsible for the scheme having a much lower take up than it should. It’s not about tax in any way, and isn’t linked to the tax rate you pay. A better name would be ‘Working Families Childcare Top-up’, because it’s effectively a discounted childcare savings scheme where you save and then pay for childcare with a 25% top-up.”
Although 1.3 million families are eligible for the scheme, Martin says that around 800,000 aren’t taking advantage of the benefit. He explains that the Government-backed scheme has been designed to offer 20p back for every 80p that’s put into a Tax-Free Childcare account. What this means is that, eligible parents can get up to £2,000 per year, per child. Martin explains that, in total, it’s possible to use the scheme to help pay for up to £10,000 of childcare per child, each year, with parents getting an extra £2,000 per child (or up to £4,000 if your child is disabled).
The Money Saving Expert explains that all you need to do is ‘open an online Tax-Free Childcare account using your Government Gateway ID’ and then for each 80p that you pay into it, the Government will ‘top the account up’. However, he warns that there is a quarterly limit on the account, and explains that parents can only get a maximum Government top-up of £500.
Martin also goes on to explain that the scheme is open to all workers, including parents who are self-employed. He said: “If you’re single, you qualify for Tax-Free Childcare, if you’re in work, including if you’re self-employed. If you have a partner, you usually both need to be in work to qualify. But there are some circumstances where you’d be eligible even if you are not working.”
He explains that anyone on sick leave, annual leave, shared parental, maternity, paternity, or adoption leave, or if you or your partner are in work and the other isn’t able to work and is claiming certain benefits (such as incapacity benefit, carer’s allowance, or severe disability allowance) should be eligible.
