People earning less than £100,000 urged to claim £2,000 to £4,000 HMRC benefit

Working parents earning less than £100,000 per year are being urged to claim a benefit from HM Revenue and Customs (HMRC) worth either £2,000 or £4,000 annually. Tax-free childcare gives parents who aren't eligible for Tax Credits or Universal Credit help towards approved childcare costs, including childminders, nurseries, nannies, after-school clubs, and play schemes.

Claimants can get £500 every three months from HMRC for each child under the age of 11, amounting to a maximum of £2,000 per year, but this amount increases to £1,000 every three months if a child is disabled, giving parents £4,000 annually. According to HMRC, almost 826,000 working families saved up to £2,000 per child through the scheme in the 2024 to 2025 tax year, and it is now encouraging those who have yet to sign up to do so now to get a financial boost from this summer.

For every £8 deposited in a Tax-Free Childcare account, the Government tops it by £2, giving parents up to £500 (or £1,000 if their child is disabled) every three months throughout the year towards childcare costs. Once families have opened an account, they can deposit money and use it straight away or keep it in the account to use it when needed. Any money in the account that isn't used can be withdrawn at any time.

Myrtle Lloyd, HMRC's director general for customer services, said: "Summer can be an expensive time if you have children. Whatever you're planning, Tax-Free Childcare can give your plans a welcome financial boost. Go to GOV.UK to start saving today."

Parents need to be at least 16 years old, be in qualifying paid work and not have an expected 'adjusted net income' over £100,000 to be eligible. HMRC says over the next three months, parents must each expect to earn at least:

• £2,379 if you're aged 21 or over
• £1,788 if you're aged 18 to 20
• £1,331 if you're under 18 or an apprentice

This is the National Minimum Wage or Living Wage for 16 hours a week on average over a period of three months. Those who are self-employed and started their business less than 12 months ago can earn less and still be eligible for Tax-Free Childcare. Parents won't be eligible if they are in receipt of any of the following benefits:

• Working Tax Credit
• Child Tax Credit
• Universal Credit
• Childcare Vouchers

If you're not currently working, you may still be eligible if your partner is working, and you get any of the following:

• Incapacity Benefit
• Severe Disablement Allowance
• Carer's Allowance or (in Scotland only) Carer Support Payment
• Contribution-based Employment and Support Allowance
• National Insurance credits on the grounds of incapacity for work or limited capability for work

You can apply if you're starting or re-starting work within the next 31 days and if eligible, you can receive Tax-Free Childcare for your child until September 1 after their 11th birthday, or until September 1 after their 16th birthday if they are disabled.

You can also claim Tax-Free Childcare alongside 30 hours for working parents. Applications can be made online via the Childcare Choices website.