Martin Lewis MSE warning as 800,000 people miss out on £2k benefit
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Martin Lewis has warned that 800,000 people are missing out on £2000 government benefit that can be used to reduce childcare costs. The Government program, which confusingly has been called the ‘Tax-Free Childcare’ scheme, offers parents up to £2000 per year per child to put towards childcare costs, including nurseries, childminders, and even a number of holiday camps. The Money Saving Expert explains: “Tax-Free Childcare is appallingly named, don’t let it confuse you. Calling the scheme Tax-Free Childcare was a political spin to ensure government gets credit for the scheme.
“Unfortunately the name is appallingly misleading, and probably partly responsible for the scheme having a much lower take up than it should. It's not about tax in any way, and isn’t linked to the tax rate you pay. A better name would be 'Working Families Childcare Top-up', because it's effectively a discounted childcare savings scheme where you save and then pay for childcare with a 25% top-up.”.
Although 1.3 million families are eligible for the scheme, Martin says that around 800,000 aren’t taking advantage of the benefit. He explains that the Government-backed scheme has been designed to offer 20p back for every 80p that’s put into a Tax-Free Childcare account. What this means is that, eligible parents can get up to £2,000 per year, per child. Martin explains that, in total, it’s possible to use the scheme to help pay for up to £10,000 of childcare per child, each year, with parents getting an extra £2,000 per child (or up to £4,000 if your child is disabled).
