£2,000 of free cash offered by the government, here’s how to get it

UK families aren’t making the most of a tax perk that could give them £2,000 of free cash per child per year.

What is the scheme?

The Tax-Free Childcare scheme contributes money towards the cost of childminders, nurseries, nannies, play schemes and after school clubs, as reported by Express.

In May, it allowed 395,000 families with 472,000 children to go to work without all of their wages going towards childcare costs, at a cost of £43.8million. This is the highest uptake of the scheme since it started in April 2017 said Laura Suter, head of personal finance at AJ Bell. She added:

Parents desperate to make their budgets balance in the cost of living crisis have increasingly turned to Government schemes they had overlooked before. Use of tax-free childcare is at a record high as people hunt for ways to boost their income.

However, Suter said that with approximately 1.3 million families thought to be eligible for the scheme, it remains 'grossly underused with huge sums sitting around unclaimed.'

How much could you earn?

According to Suter, the average family has 1.9 children and thus could receive £3,800 on average to help pay their childcare costs per year. She highlighted how the scheme could make a difference during the current cost-of-living crisis:

The UK has some of the highest childcare costs in the world and this additional money would go a long way to keeping some families afloat in the current bills crunch.

Under the scheme, families can receive up to £500 per child every three months, equalling a maximum of £2,000 per child per year. That means a family with two children could receive up to £4,000 to help pay the costs of childcare per year.

The government is encouraging families to claim the funds available. To do so, set up an online childcare account at Gov.uk/tax-free-childcare, and put money into it. For every £8 you pay, the government will pay £2, which you can then use to pay your childcare provider, provided they are signed up to the scheme.

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