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Less than half of eligible families access Tax-Free Childcare offer

By Rachel Lawlerchildren playing tax free childcare

A record of 512,415 families accessed the Tax-Free Childcare scheme in 2021-2022, according to new statistics released by HMRC.

This up from 374,135 in the previous tax year and represents the highest number of families accessing the scheme in any one year since the scheme launched in 2017.

Tax-Free Childcare helps families with the cost of childcare. For every £8 paid into a Tax-Free Childcare online account, families automatically receive an additional £2 in government top-up up to £500 every three months or £1,000 if their child is disabled.

However, many families do not access this help, despite being eligible. HMRC estimates that 1.3 million families are eligible for the offer, which means that less than half of those eligible joined the scheme.

Big difference for families
Myrtle Lloyd, director general for customer service at HMRC, said: “Tax-Free Childcare can make a big difference to families, helping with the bills for things like nurseries, childminders and after school clubs. It’s easy to register – search ‘Tax-Free Childcare’ on GOV.UK.”

Difficult time for the sector
Neil Leitch, chief executive at the Alliance, said: “Although today’s figures show an increase in the number of families using the tax-free childcare scheme, the fact remains that the scheme continues to be used by less than half of eligible families. 

“At a time when so many early years providers are struggling to remain financially viable, surely much of the money the government continues to plough into this struggling policy would be better spent increasing funding for the early entitlement offers, something our own research has shown would be the most effective way to drive down the cost of early education and childcare.

“What’s more, we have long warned that tax-free childcare is a regressive policy, with parents with more disposable income receiving more financial support than those with less. Given that we are in the midst of a cost-of-living crisis, we urge the government to start focusing on investing in policies that will actually benefit those families that need the most support.”