125,000 families take up tax-free childcare
23rd May 2019
The number of families using tax-free childcare has more than doubled since this time last year, but around 1.4 million households could be missing out on the scheme.
Recent HMRC statistics show that 125,000 families used tax-free childcare in March 2019.
The figure shows a significant increase since March 2018, when just 47,000 families used the scheme, but still falls short of the Government's estimate that 1.5m families could have qualifying childcare costs.
Tax-free childcare was launched in April 2017 and fully rolled out by February 2018.
It replaced the previous scheme of childcare vouchers, which closed to new applicants in October 2018.
Under tax-free childcare, parents can open an account and receive Government contributions to cover childcare costs.
For every £8 they save, the Government adds an extra £2, up to a maximum of £2,000 per child, per year - or £4,000 for disabled children.
Parents who were already receiving childcare vouchers before October 2018 can still claim them, but will lose access if they don't order any within 12 months, if they change employer, or if they switch to tax-free childcare.
Mutual insurer Royal London has encouraged those who still receive childcare vouchers to consider which scheme will be best for them in the long term.
Becky O'Connor, personal finance specialist at Royal London, said:
"Which [scheme] is best depends on many factors besides the age of your children, including whether you are basic or higher-rate taxpayers, how many children you have and whether you are self-employed.
"It's hard to compare but if you do have the choice, it is worth checking."
Speak to us about tax-free childcare.