HM Revenue and Customs issued a reminder in April 2024 for parents to sign up for Tax-Free Childcare, targeting those earning less than £100,000 per year. The agency has also confirmed early £108.20 payments for UK households claiming Child Benefit in May 2024 due to bank holidays on May 4 and May 25, with payments moved to May 1 and May 24 respectively. This dual push comes as HMRC, under the Labour Party government, is urging people to check if they're missing out on money, especially if earning less than £80,000 a year.
Tax-Free Childcare helps working parents cover childcare costs such as nurseries, childminders, nannies, and after-school clubs, according to multiple reports. For every £8 deposited into a Tax-Free Childcare account, HMRC tops it up by £2, providing a 25% government contribution. For disabled children, the scheme offers up to £1,000 every three months, totaling £4,000 per year. Parents with disabled children can use these funds to pay for extra childcare hours or specialist equipment like mobility aids, multiple reports indicate.
Eligibility for Tax-Free Childcare requires parents to earn at least £2,539.68 before tax over three months if aged 21 or over, £2,080 if aged 18-20, or £1,570.40 if under 18 or an apprentice, according to multiple reports. Usually both parents in a couple must work on an employed or self-employed basis and have an income of at least £2,643 each every three months, research suggests. Self-employed people who started their business less than 12 months ago can earn less and still be eligible for Tax-Free Childcare. Recently self-employed people are allowed start-up periods where this income level doesn’t have to be met, or can use an average over the tax year, according to research.
Special circumstances include periods on maternity leave, sick leave, paternity leave, parental leave, adoption leave and shared parental leave counting as being in work for any older children already enrolled in the scheme, research indicates. Eligibility is limited to the last 31 days of leave where parents are claiming for a new child, whose birth or adoption led to the time off. To be eligible the household must have one child under the age of 12, or a child with a disability under the age of 17, with the scheme running according to the school year. This means disabled children remain eligible until the September after their 16th birthday, while other children are eligible until the September after their 11th birthday. Parents pay money into a childcare account, which the government tops-up by 25%, and if due to start work soon, they do not have to wait to apply, research notes. According to Daily Express - Finance, Martin Lewis described the application process as taking roughly 30 minutes online, while also noting that about 800,000 parents in the UK are missing out on the scheme.
It takes roughly 30 minutes to apply for Tax-Free Childcare online.
Child Benefit can be claimed by parents or guardians responsible for a child under 16, or under 20 if in approved education or training, multiple reports state. The benefit is usually paid every four weeks on a Monday or Tuesday, with payments of £26.05 weekly for one child, totaling £1,354.60 annually. Families with two children receive £2,275 a year in Child Benefit, and those with three children get £3,172 annually, according to multiple reports. Only one parent or carer can claim Child Benefit per child, and it can be claimed 48 hours after registering a birth or once a child comes to live with you, with backdating possible up to three months.
Parents may qualify for Child Benefit until their child turns 20 if the child is in full-time education or approved training, but must inform HMRC to avoid automatic stoppage at age 16, multiple reports indicate. Child Benefit payments cease automatically in August on or after the child's 16th birthday unless HMRC is notified of continued eligibility. Qualifying education includes A-levels, T-levels, GCSEs, Scottish Highers, NVQs up to level 3, home education, study programmes in England, and pre-apprenticeships. Approved training encompasses Foundation Apprenticeships in Wales, No One Left Behind in Scotland, and specific programmes in Northern Ireland. Full-time education is defined as more than an average of 12 hours per week of supervised study or course-related work experience, with exceptions for illness or disability. Education and training that does not qualify includes university degrees, BTEC Higher National Certificates, pre-degree courses, HNC/HND level 7, CertHE, job contract training, unapproved apprenticeships, and employer-agreed courses.
HMRC is warning people earning £60,000 or more that they may need to pay back Child Benefit through the High Income Child Benefit Charge. The charge applies if a parent or partner receives Child Benefit and at least one earns over the threshold, requiring repayment of some or all of the benefit, according to multiple reports. It can also apply if someone else gets Child Benefit for a child living with you and contributes at least equally to upkeep. The charge can be paid through salary or Self Assessment, and from tax year 2024-25 onwards, if you or your partner earn £80,000 or more, you have to pay back all Child Benefit. You pay back 1% of Child Benefit for every £200 earned over the threshold, and if combined adjusted net income exceeds the threshold, the higher earner is responsible for the charge.
To determine if income is over the threshold, calculate adjusted net income, which includes total taxable income minus tax reliefs, multiple reports advise. There is an online Child Benefit tax calculator to estimate benefits and charges. If you or your partner earn £60,000 or less annually, you're eligible to claim the full amount of Child Benefit if the child resides with you or you contribute equivalently to care.
About 800,000 parents in the UK are missing out on Tax-Free Childcare.
Child Benefit payment rates increased for the 2026/27 tax year, with the weekly rate for the eldest or only child rising from £26.05 to £27.05, and for additional children from £17.25 to £17.90. The benefit is set to rise by 3.8% in April 2026.
Child Benefit provides financial assistance, National Insurance credits for caregivers, and a National Insurance number for the child, according to multiple reports.
HMRC's outreach efforts under the Labour government emphasize checking eligibility, particularly for those earning less than £80,000 a year, to ensure families access available support.
Tax-Free Childcare is a UK-wide scheme covering England, Scotland, Wales and Northern Ireland, research indicates. The scheme is open to all parents of children under 12, or under 17 if disabled, and requires opening an account online. To be eligible, you must be working, and if you have a partner they must work too, and you must not be receiving any support through Universal Credit. Most parents eligible for Universal Credit can save more money using its childcare elements instead of Tax-Free Childcare, research suggests. If having difficulty with your account, you can call the childcare service helpline.
The impact and uptake of HMRC's initiatives remain unclear, including how many parents have signed up for Tax-Free Childcare following the April 2024 reminder. The exact number of parents currently missing out on Tax-Free Childcare is unknown beyond Martin Lewis's estimate of 800,000. It is also uncertain whether there are plans to adjust income thresholds for Tax-Free Childcare or Child Benefit in response to inflation or policy changes. The specific impact of the Labour Party government on HMRC's outreach efforts has not been quantified, and how many parents have been affected by payment disruptions due to not notifying HMRC about extended Child Benefit eligibility before August 31 remains unreported.