Martin Lewis is urging families not to miss out on financial help to cover the cost of childcare this summer – here’s everything you need to know about the Tax-Free Childcare Scheme
Martin Lewis has issued a rallying call to 800,000 families, urging them not to miss out on vital cash that could help cover childcare costs this summer. While co-hosting ITV’s Good Morning Britain alongside Susanna Reid on Wednesday, the money-saving expert highlighted how the UK Government’s ‘Tax-Free Childcare Scheme’ can be utilised for nursery fees, childminders, summer camps and breakfast clubs.
The financial expert pointed out to GMB viewers that the scheme’s misleading name – Tax-Free Childcare Scheme – is causing thousands to overlook the available support. He stated: “It isn’t tax-free and it isn’t about tax so it’s completely mis-named and totally confusing and that puts many people off.”
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He also mentioned his ongoing campaign to have it renamed as the ‘Working Family Childcare Top-Up’, which he believes will prompt more families to benefit from the scheme.
Mr Lewis detailed the scheme’s use specifically for paying for clubs during the school summer holidays, noting its flexibility to meet individual childcare needs.
In an effort to demystify the scheme for viewers, he broke down how it operates: “You put money into the Tax-Free Childcare account and for every 80 pence you put in, the state (UK Government) adds 20 pence, up to a maximum of £500 free per quarter, so £2,000 for a year which you can then use to pay on childcare.”
Martin previously explained in the MoneySavingExpert newsletter that this can be used to pay for childcare with registered providers.
This means:
- In Scotland: Care Inspectorate registered
- In England and Wales: Ofsted registered, which includes the Early Years Register & the Childcare Register
- In Northern Ireland: Registered with the local Health and Social Care Trust
Martin also explained the eligibility criteria:
- Child must be aged 11 or under, unless they have a disability in which case it rises to 16 or under
- Parents need to earn the equivalent of at least 16 hours per week on the National Minimum Wage
- No parent can earn over £100,000 per year
Martin threw in a cautionary note for those receiving Universal Credit, stating: “If you’re on Universal Credit, you’re far better off claiming your childcare costs through the Universal Credit system as claiming this (Tax-Free Childcare) would actually stop your Universal Credit.”
He didn’t stop there, adding a significant reminder: “This is just a signpost, 825,000 of the 1.25 million eligible families aren’t claiming so the key is, if you pay for childcare, check out ‘Tax-Free Childcare’.”
Diving into the world of Tax-Free Childcare, the recent stats from HMRC are enough to make any parent sit up, reports the Daily Record. Nearly 826,000 working families have padded their wallets with savings of up to £2,000 per cherub during the 2024/25 tax year.
The scoop on Scotland was especially impressive in March 2025, with 36,095 families using the scheme to ease their childcare budget burdens.
Working families jumping on the Tax-Free Childcare bandwagon can notch up an extra £2,000 in their yearly finances for kids under 11, or a hefty £4,000 for children up to the age of 16 if they’re disabled.
For busy parents navigating childcare options, from nurseries for children to after-school and holiday clubs for the bigger kids, the scheme promises to cushion against those steep childcare expenses.
For every £8 deposited into a Tax-Free Childcare account, the UK Government adds an extra £2, meaning parents can receive up to £500 (or £1,000 if their child is disabled) every three months towards their childcare costs.
Once families have set up a Tax-Free Childcare account, they can deposit money and use it immediately or save it in the account for future use. Any unused funds in the account can be withdrawn at any time.
HMRC has stated that it takes just 20 minutes to apply online for a Tax-Free Childcare account. Once the account is active, parents can deposit money and use it immediately or save it in the account for future use. Any unused funds in the account can be withdrawn at any time.
Eligibility for Tax-Free Childcare
Families may be eligible for Tax-Free Childcare if they:
- Have a child or children aged 11 or under. They stop being eligible on September 1 after their 11th birthday. If their child has a disability, they may get up to £4,000 a year until September 1 after their 16th birthday
- Earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average
- Each earn no more than £100,000 per annum
- Do not receive Universal Credit or childcare vouchers
A complete list of the eligibility criteria can be found on GOV.UK here.
Financial support for parents in Scotland
Social Security Scotland provides five family payments which can assist with additional school term expenses as well as everyday family costs like food, clothing and days out.
The Scottish Child Payment is a weekly payment of £27.15 for eligible families with children up to the age of 16 – the payment amounts to £108.60 every month and is only available north of the border.
Parents could be entitled to up to £212.20 each month in additional support, combined with Child Benefit payments from HMRC. Child Benefit is a separate UK-wide payment worth £26.05 for the eldest or only child and is also paid every four weeks, totalling £104.20.
The three Best Start Grant payments and Best Start Foods, also part of social security support, are designed to assist families at key stages in their children’s early years, including during pregnancy.
There is no limit on the number of children in one family who can receive these payments.
One-off payments for families
- Best Start Grant Pregnancy and Baby Payment – one-off payment of up to £767.50 available after 24 weeks of pregnancy until a baby turns 6 months.
- Best Start Grant Early Learning Payment – one-off payment of £319.80 to help with the costs of early learning when a child is between two, and three years and six months.
- Best Start Grant School Age Payment – one-off payment of £319.80 to help with the costs of starting school available between June 1 and the last day in February in the year when a child is first old enough to start primary one.
- Best Start Foods – up to £43.20 every four weeks from pregnancy up to when a child turns three to help buy healthy food, milk and first infant formula.
Scottish Child Payment
The Scottish Child Payment helps towards the costs of supporting your family. It is a weekly payment of £27.15 that you can get for every child you look after who is under the age of 16. Payments are made every four weeks and are worth £108.60 per child.
Parents, carers and guardians can find more information on the dedicated Children and Family section on mygov.scot here or by calling Social Security Scotland free on 0800 182 2222.
Families can learn more about the childcare offers available to them and what could fit their family by visiting Childcare Choices on GOV.UK here.
Families in Scotland may be able to access help during the ongoing cost of living crisis through the Cost of Living Support Scotland website here.