Covid-19: tax-free childcare extended

Tax-free childcare has been extended to 31 October for parents who may have fallen below the minimum income requirement, and critical workers who may have exceeded it

Families who benefit from government funded childcare support were given a boost as the government announced that they would not lose out due to Covid-19.

Working parents or carers, who are eligible for tax-free childcare or 30 Hours Free Childcare but have temporarily fallen below the minimum income requirement as a result of the pandemic, will continue to receive financial support until 31 October.

Critical workers who may exceed the income threshold for the 2020-21 tax year, as a result of working more to play a vital role in tackling the coronavirus pandemic, will continue to receive support this tax year.

Through tax-free childcare, delivered by HMRC, families will receive a £2 government top-up for every £8 they pay into their child’s account, up to the value of £2,000 per child, or £4,000 per disabled child in financial support. The money can be used towards the cost of qualifying childcare for a child up to the age of 11 or 17 for a disabled child.

HMRC’s deputy chief executive and second permanent secretary, Angela MacDonald, said: ‘HMRC has been providing vital financial support to families during a time when it has been needed most and we will continue to help them as they gradually transition back to a normal life.

‘We want to make sure families will not be adversely affected by any abrupt change in circumstances, which is why we have extended available support through tax-free childcare to give families that extra boost.’

The Department for Education (DfE) provides 30 hours free childcare to eligible three to four year olds in England with more than 600,000 three and four year olds benefiting from this offer in the first two years of delivery, and nearly 350,000 children benefited from 30 hours in January 2020 alone.

DfE has seen more than 55,000 parents applying for 30 hours places since the start of lockdown restrictions which demonstrates how essential this support is and why parents’ eligibility must be protected.

DfE’s children’s minister, Vicky Ford, said: ‘Our 30 hours childcare offer has always been about supporting parents back into work, and in these times, this ambition is now more important than ever. That is why we are again extending eligibility for the government’s childcare offers so that no parent loses out because of a fall in income due to coronavirus.

‘This builds on our significant financial support for the early years sector – who are so integral to the UK’s recovery from this pandemic. We are continuing to provide longer term reassurance to nurseries and childminders that are open by “block-buying” childcare places for the rest of this year at the level we would have funded before coronavirus, regardless of how many children are attending.’

To continue receiving the financial support for tax-free childcare and 30 hours free childcare, parents need to reconfirm their eligibility every three months.

HMRC has continued to help working tax credit claimants with the cost of childcare throughout the pandemic. Parents and carers in receipt of the childcare element of working tax credits who have continued to pay childcare fees they have incurred, despite their children being unable to access childcare because of Covid-19, must notify HMRC if they expect this to continue beyond 7 September.

After this date HMRC will no longer pay the childcare element for those in this position.

Claimants should update HMRC as soon as possible if their childcare stops or if the costs for their childcare decrease or end.

Parents and carers can report such changes by calling the tax credits helpline on 0345 300 3900.

Useful links:

Taxpayers can check their eligibility for Tax-Free Childcare or 30 Hours Free Childcare in relation to COVID-19 online. If their childcare circumstances have changed recently, then log into the childcare account, check the details and reconfirm as usual to avoid delays later.

Definition of critical workers affected by coronavirus

Parents and carers who use Working Tax Credits should check their eligibility and updated guidance relating to coronavirus here

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