Parents who haven’t registered could be missing out on yearly savings of up to £2,000 per child, or £4,000 if their child has a disability
Working parents could save up to £2,000 on childcare costs for the 2025/26 financial year by taking advantage of a scheme run by HM Revenue and Customs (HMRC). With the Easter break just around the corner, families who have not yet signed up for Tax-Free Childcare could be missing out on annual savings of up to £2,000 per child, or £4,000 if their child has a disability.
Tax-Free Childcare can help cover the cost of approved childcare for children aged 11 or under, or up to 16 if the child has a disability. Parents can receive up to £500 (or £1,000 if their child is disabled) every three months, meaning that for every £8 paid into their online account, they will automatically receive an additional £2 top-up from the UK Government.
HMRC has stated that it only takes 20 minutes to apply online for a Tax-Free Childcare account, which can be used to help cover the cost of a child’s nursery, childminder, breakfast or after-school club, or holiday activity club. Once an account is opened, parents can deposit money immediately, so it is ready to be used whenever it is needed; and any unused money in the account can be withdrawn at any time, reports the Daily Record.
Eligibility for Tax-Free Childcare
Families could qualify for Tax-Free Childcare if they:
How to apply
To apply, you can submit an application for Tax-Free Childcare online. If you’re married or in a civil partnership and living together, or if you’re not married or in a civil partnership but live as though you are, your partner must be included in your application.
You’ll also need your National Insurance number, Unique Taxpayer Reference (UTR) if you’re self-employed, the UK birth certificate reference number for any children you’re applying for, and the date you started or are due to start work.
There are specific rules if you’re registered as a director with HMRC. You will need to provide evidence that you meet the minimum income requirements that prove you’re eligible for the scheme, this could be done through PAYE records.
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However, if you do not regularly submit PAYE information, you may need to provide additional proof that you are working and expect to meet the minimum income requirements for the next three months.
A statement from your accountant, copies of invoices, wage slips, and bank statements may be required. Additionally, you might need to provide year-end payroll, a letter from your tax agent or adviser confirming your salary has been paid and taxed, and annual wage slips.
