Interactive Investor

Call to promote scheme that is ‘great money saver’ for parents

19th May 2021 14:50

Myron Jobson from interactive investor

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interactive investor comments on the latest Tax-Free Childcare statistics.

HMRC has today revealed the latest statistics on the numbers of families and children with open and used Tax-Free Childcare accounts and the amount of government top up they receive.

Key points:

  • 282,000 families used Tax-Free Childcare for 329,000 children in March 2021, this compares with 248,000 families using childcare for 287,000 children in December 2020
  • This increase in Tax-Free Childcare account use continues the recovery from the impact of the first Covid-19 lockdown, which started in March 2020
  • The government spent £33.3 million on top-up for families in March 2021, £7.6 million more than in December 2020
  • For every £8 a parent pays into their Tax-Free Childcare account, the government will add an extra £2, up to a maximum of £2,000 per child per year.
  • For disabled children, the maximum is £4,000 per year. 

Myron Jobson, Personal Finance Campaigner, interactive investor, says: “The closure of schools during the government-enforced coronavirus lockdowns resulted in a struggle for many working parents to access childcare at a time where they needed it most. A wail from a child in the background of work-related video conferencing calls became an all-too-familiar and accepted by-product of the working-from-home phenomenon.

“The uptake of tax-free childcare initiative reflects this – decreasing in the first few months of the quarter before spiking towards March when children were allowed to return to classrooms.

“The Tax-Free Childcare scheme is a great money saver for eligible parents, effectively offering 20% off childcare, so you're not going to get it from pre-tax income. However, it continues to fall far below original estimates. Greater promotion of the initiative is still needed to raise awareness while encouraging even more parents to apply.”

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