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What is HMRC’s £2,000 tax-free summer holiday support?

  • 3 min read
  • 22 Jul 2022
What is the £2,000 tax-free summer holiday support?

Free money to spend on the kids? And according to HMRC, many families with young children could already be missing out?! 

OK, what are we talking about here?

It’s HMRC’s Tax-Free Childcare scheme which helps parents to cover certain childcare costs over the summer.

So, what’s Tax-free Childcare?

If you have children under 11 and you’re not using Tax-Free Childcare, listen up.👂Eligible families can receive up to £2,000 a year per child to help with general costs. 

These costs include, holiday clubs, before and after school clubs, childminder, nurseries, and other approved childcare schemes – woohoo!

How does it work?

It’s pretty simple. For every £8 you pay into your online childcare account, the government will pay £2 to pay your provider. This works out to £500 every 3 months – £2,000 for the year.

If your child is disabled, you get £1,000 every 3 months, or £4,000 over the course of the year. You can use the extra money to:

  • Help cover any extra hours of care your child requires
  • Pay your childcare provider for specialist equipment

How do I know if I’m eligible?

We’ve outlined the few factors HMRC use to check if you’re eligible below. 

If you’re working 👩‍💻

You can claim if your work status is one of the following:

  • In work
  • On sick leave or annual leave
  • On shared paternal, maternity, paternity or adoption leave

If you’re not working ❌👩‍💻

You can still claim if your partner is working and you receive one of the following:

  • Incapacity Benefit
  • Severe Disablement Allowance
  • Carer’s Allowance
  • Contribution based Employment and Support Allowance

You can also apply if you’re restarting work within the next 31 days.

Your income 💸

If you’re employed, you need to earn the National Minimum (or Living) Wage. Plus, you need to be working for at least 16 hours a week. 

HMRC will look to see that you’re earning this from the day you apply and also over the following 3 months. Your partner will need to earn at least this amount as well.

If you’re self-employed, use an average of how much you expect to earn over the current tax year

Be aware 👀, if you and your partner earn over £100k (including bonuses) before taxes, you won’t be eligible. 

Your child 👨‍👩‍👧‍👦

It’s pretty simple – your child has to be under the age of 11 and live with you. 

Adoptive children are eligible, but foster children are not unfortunately. 

If your child has a disability, they have to receive one of the following to be eligible:

  • Disability Living Allowance
  • Personal Independence Payment
  • Armed Forces Independence Payment
  • Child Disability Payment (Scotland only)
  • Adult Disability Payment (Scotland only)

Your child can also be eligible if they are certified as blind or severely sight-impaired. You can claim until your child is 17.

Your immigration status ✈️

You or your partner must have a National Insurance number and at least one of the following:

  • British/Irish citizenship
  • Settled/pre-settled status
    • Or, you’ve applied and waiting for a decision
  • Permission to access public funds 

You can check your UK residence card to check if you have permission to access public funds.

You or your partner might still be eligible as a frontier worker, if you’re living in an EU country, Switzerland, Norway, Iceland, or Liechtenstein

What if I already get the 30 hours free childcare?

Parents, don’t fret. If you’re claiming the 30 hours free childcare, then you have nothing to worry about. You can receive both at the same time, woop!

However, if you’re receiving any of the following benefits, you will not be eligible to claim the tax-free childcare on top:

  • Tax credits (working or child)
  • Universal credit
  • A childcare grant or bursary
  • Childcare vouchers

If you apply for tax-free childcare and are accepted, your other benefit will be cancelled.

Do I have to mention my partner (or ex partner)?

If you have a partner, definitely mention it in your application. Only one of you can claim.

If you’re separated on the other hand, you can choose which one of you will apply if you’re jointly responsible for a child. If you’re struggling to come to an agreement, you can apply separately and HMRC will choose who receives the childcare account – it happens!

How do I apply for Tax-free Childcare?

As always, you need to apply through HMRC. You can apply here

Pro tip – have the following ready for when you apply:

You’ll find out if you’re eligible for both tax-free childcare and 30 hours free childcare through the one application, which only takes a mere 20 minutes to complete.

Sometimes, you’ll find out almost immediately but it can take up to 7 days to confirm if you’re eligible. HMRC love a waiting a game.

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