HMRC urges parents to apply for extra £2,000 childcare support as cost of living rises

HMRC are encouraging parents and carers to check if they are eligible for a £2,000 payment to contribute to the costs of childcare.

As the cost of living soars with ever-increasing energy, food and rent prices all placing stress on people bank accounts, the Government is putting in place provisions to help people with dependents.

These include tax-free childcare which is being offered to parents ahead of the February half term and financial support.

READ MORE: Government propose to scrap Universal Credit and give everyone on it £163.50 a week instead

Approximately 1.3 million families in the UK are estimated to be eligible claimants for the support, whilst only 316,000 are said to currently claim it.

Tax-Free Childcare is available for children aged up to 11, or 17 if the child has a disability.

Every £8 deposited into an account will see the government top up an additional £2.

The money must be spent on childcare costs, such as a registered childcare provider, such as nurseries, nannies, after school clubs and play schemes.

Your childcare provider must be signed up to the scheme.

Who is eligible?

Eligibility depends on whether you are working, your income, the age of your child/children and their circumstances.

At present, the rules say you need to be earning at least the national minimum wage or living wage, for the equivalent of 16 hours a week.

If you have a partner, they will need to earn this amount too.

Those who are self-employed are also eligible, but also need to be earning the amount listed above.

Should you be self-employed and are not expecting to make enough profit in the next three months, you can register an average of how much you expect to earn over the current tax year.

Both yourself and your partner will also have to earn less than £100,000 a year to qualify for the scheme – you cannot have two accounts for the same child.

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Whilst you typically have to be employed to claim tax-free childcare, there are some exceptions.

If one of you is working and the other claims Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or Employment and Support Allowance, you may be eligible.

How much could I get?

A successful claimant can receive up to £500 every three months – up to £2,000 a year – for each of your children.

For disabled children, the maximum amount you could get rises to £4,000.

To use the tax-free childcare scheme, you need to set up an online government account where you pay in your own money.

You need to set up an online government account to deposit your own money to use the tax-free childcare scheme. Depending on the amount you contribute, the government will then top up your account with a bonus amount – up to the limits listed above.

How do I apply for tax-free childcare?

You can apply for the tax-free childcare scheme on the Gov.uk website.

During the application, a claimant needs to provide information about themselves, including your National Insurance number, as well as your individual circumstances.

It is important to note that parents of three and four-year-olds can apply for 30 hours free childcare a week.

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