Tax-free childcare provides thousands of eligible working families with vital financial support towards the cost of their childcare with the government paying £240 million annually in top-up payments to families using the scheme.

For thousands of families who use tax-free childcare, the money they save each month on their childcare costs is money that goes back into their pockets.

For every £8 paid into a tax-free childcare online account, families will automatically receive an additional £2 in government top-up, and it is available for children aged up to 11, or 17 if the child has a disability.

Families receive up to £500 every three months, per child, or £1,000 if their child is disabled, helping towards the cost of before and after-school clubs, childminders and nurseries, holiday clubs and other approved childcare schemes.

But hundreds of thousands of families could be missing out, with recent research published by HMRC estimating that about 1.3 million families could be eligible for this government support. Parents and carers are being urged to check their eligibility and register for tax-free childcare via GOV.UK.

Myrtle Lloyd, HMRC’s director general for customer services, 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.”

Helen Whately, HM Treasury’s exchequer secretary to the treasury, added: “It’s fantastic that more parents are taking up Tax-Free Childcare. This support provides a helping hand with childcare costs for working families.

“With over one million families eligible, I want to encourage parents to take advantage of Tax-Free Childcare and keep the extra pounds in their pocket.”

The latest monthly comparisons for Scotland also show that a record number of families were using their Tax-Free Childcare account in March 2022 – 22,710 families compared to 15,240 in March 2021 – an increase of 7,470 families.

The scheme offers a 20% government-funded top-up on money deposited into tax-free childcare accounts, which can be used to pay their childcare provider. Accounts can be opened at any time of the year and can be used straight away, and money can be deposited at any time and used when needed.