The scheme in question is the Government’s Tax-Free Childcare scheme. Martin Lewis has previously described this scheme as being “appallingly named” and “misleading” and blames it for the low take up
Martin Lewis has warned that 800,000 parents could be missing out on a scheme which provides them with up to £4,000 to help with childcare costs.
The scheme in question is the Government’s Tax-Free Childcare scheme. Martin Lewis has previously described this scheme as being “appallingly named” and “misleading” and blames it for the low take up.
In a post on his Money Saving Expert (MSE) website, he said: “It’s not about tax in anyway, 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.”
The childcare scheme is an online account which parents and guardians pay into, and then they receive a top up payments from the Government. For every £8 you pay into the account, the Government will automatically add in £2 which you can put towards your childcare costs. Childcare allowed under the scheme must be a registered provider such as nurseries, nannies, after school clubs and play schemes.
The scheme helps pay for childcare for children up to the age of 11 years, or up to 16 if the child has a disability. If you’re eligible, you can get up to £500 every three months – up to £2,000 a year – for each of your children. If your child is disabled you could receive £1,000 or up to £4,000.
To be eligible for the scheme, you must earn at least the minimum wage, for the equivalent of 16 hours a week. If you’re in a couple, your partner must also earn this. Self-employed workers are also eligible if they earn this amount too. Both you and your partner also have to earn less than £100,000 a year to qualify.
Once an account is opened, parents can deposit money immediately, so it is ready to be used whenever it is needed; and unused money in the account can be withdrawn at any time. Going forward, you will need to make sure the details on the account are up to date every three months to keep receiving the Government top-ups.
This scheme is open to working families so you will not be able to get this help if you are claiming Tax Credits, Universal Credit or childcare vouchers. If you open a Tax Free Childcare account, you will lose your benefits payments – so always talk to a benefits expert or advisor before making any decisions. There are some exceptions for those who are not working. For example, you may still be able to claim if one of you is working and the other gets Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or Employment and Support Allowance (ESA).
To secure your discount you’ll need to set up an online account for your child on the Government’s website.