Parents urged to check whether they could get childcare costs top-up

Thousands of families are missing out on the Tax-Free Childcare top-up. We explain how to apply

Children playing with colourful wooden building blocks on the table
(Image credit: Getty images)

The government is urging parents to check whether they could be eligible for funding towards their childcare costs.

More than 401,300 families collectively benefited from £44.4 million in government funding towards childcare costs in September 2022, according to HM Revenue and Customs (HMRC).

Yet thousands of families, earning up to £100,000 a year, are still missing out on the government’s Tax-Free Childcare top-up scheme which offers up to £2,000 a year per child towards childcare costs, including childminder, nursery and wraparound care.

For every £8 paid into a Tax-Free Childcare online account, families automatically receive an additional £2 from the government. They can receive up to £500 every three months (adding up to £2,000 a year), or £1,000 (£4,000 a year) if their child has disabilities.

The top-up payments can be used to pay for approved childcare for children aged 11 or under, or up to 17 if the child has a disability, whether the child goes to nursery, a child minder, has term-time wraparound care or attends a holiday club.

Myrtle Lloyd, HMRC’s director general for customer services, said: “We know childcare can be expensive so using Tax-Free Childcare can make a huge difference to household finances. To find out more, search ‘Tax-Free Childcare’ on gov.uk.”

How to get tax-free childcare

Eligible parents, each earning no more than £100,000, with children 11 or under can claim up to £2,000 per child per year towards childcare costs.

For parents of disabled children it’s up to £4,000 per year and children qualify until they turn 17.

Parents of pre-schoolers can use Tax-Free Childcare to pay a registered childminder, nanny, nursery, play scheme or club, school or home-care worker, while parents with kids at school can use it to pay for after-school childcare or club, wraparound childcare and holiday clubs.

Applying online via Gov.UK (opens in new tab) takes less than half an hour and you’ll need your National Insurance number and, if you’re self-employed, Unique Taxpayer Reference (UTR) number.

The money is added by the government directly into parents' childcare accounts. You then need to spend this on a registered childcare provider - there are nearly 60,000 registered childcare providers to choose from, including nurseries, nannies, childminders and school clubs.

Once on the scheme, you need to confirm your details every three months.

Additional reporting by Press Association.

Katie is staff writer at The Money Edit. She was the former staff writer at The Times and The Sunday Times. Her experience includes writing about personal finance, culture, travel and interviews celebrities.  Her investigative work on financial abuse resulted in a number of mortgage prisoners being set free - and a nomination for the Best Personal Finance Story of the Year in the Headlinemoney awards 2021.