MARTIN Lewis has urged hundreds of thousands of households to claim £2,000 free cash to help towards childcare.
The consumer champion issued the advice about the tax-free childcare scheme on the latest episode of his ITV Money Show.
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On the episode his co-host Angelia Bell read out a message from a member of the public who revealed she didn’t know she was entitled to the free government cash.
But Martin said there were still 800,000 eligible for the help that weren’t using it.
He said: “There are 800,000 people in the UK eligible for tax-free childcare which is effectively where you get 20% off the price of childcare through gov.uk.
He added: “And people aren’t using it. So check that out if you’re paying for childcare.”
What is the tax-free childcare scheme?
The scheme’s available to parents or guardians in specific circumstances to help pay for the cost of childcare.
You can get up to £2,000 a year for each child. This figure rises to up to £4,000 a year if your child has a disability.
The money can be put towards kids activities over the school holidays like holiday clubs and sports activities.
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The cash can also be used for childcare throughout the rest of the year, including paying for childminders.
You get £2 from the government for every £8 you put into your tax-free childcare government account.
You can claim tax-free childcare at the same time as claiming 30 hours free childcare, which is a separate scheme.
Who’s eligible for the scheme?
Getting access to the scheme depends on your circumstances.
For example, if either you or your partner earns more than £100,000 a year, including bonuses, you won’t qualify.
You also need to meet other criteria around your work situation, how much you earn and whether your partner has a job.
Working criteria
If you are working, you can usually get tax-free childcare if you (and your partner, if you have one) are:
- in work
- on sick leave or annual leave
- on shared parental, maternity, paternity or adoption leave
If you’re on adoption leave, you can’t apply for the child you’re on leave for unless you plan to go back to work within 31 days of the date you first applied.
If you’re not working, you may still be eligible if your partner is working and you get Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or contribution-based Employment and Support Allowance.
In this instance you can apply if you’re starting or re-starting work within the next 31 days.
Income criteria
You need to earn over a certain threshold for the next three months – the equivalent of the National Minimum Wage for 16 hours a week on average.
For example, at the minute that means over the next three months you have to earn at least:
- £1,976 if you’re 23 or over
- £1,909 if you’re 21 or 22
- £1,420 if you’re 18 to 20
- £1,000 if you’re under 18 or an apprentice
If you have a partner, they’ll be expected to earn at least this much too.
If you’re self-employed and do not expect to make enough money in the next three months, you can use an average of how much you expect to make over the current tax year.
But the earnings limit doesn’t apply if you’re self-employed and started your business less than 12 months ago.
Criteria for your child or children
Your child must be 11 or under and usually live with you.
They stop being eligible on September 1 after their 11th birthday.
While adopted children are eligible, foster children aren’t.
If your child is disabled you may get up to £4,000 a year until they’re 17.
They’ll be eligible if:
- receive Disability Living Allowance, Personal Independence Payment, Armed Forces Independence Payment, Child Disability Payment (Scotland only) or Adult Disability Payment (Scotland only)
- are blind or severely sight-impaired
One thing that’s important to note is that you can’t get tax-free childcare if you’re also claiming working tax credit, child tax credit, Universal Credit or childcare vouchers at the same time.
You should wait until you get a decision on your tax-free childcare application before cancelling your Universal Credit claim.
That’s because which scheme is best for you will depend on your situation.
You can use a childcare calculator to figure out what support is the best option.
How do I apply?
There’s one application for tax-free childcare and 30 hours free childcare. When filling it out, you’ll find out if you’re eligible for both.
You need to apply online on the government’s website.
You’ll need to set up the account which you’ll use to pay for your registered childcare.
You’ll need details to hand for both you and your partner including:
- National Insurance numbers
- Unique Taxpayer Reference (UTR), if either of you are self-employed
It should only take around 20 minutes to apply and it can take up to seven days to find out if you are eligible.
One important thing to take note of is that you’ll need to reconfirm your details every three months to keep getting the help.
Thousands of parents on Universal Credit can get a £500 grant to help with childcare costs through the Sure Start grant.
Plus, we revealed how else to get free or cheap childcare.
