BDO: Use of Tax-Free Childcare rises by 24%

by | Jul 18, 2023

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The number of families taking advantage of the Government’s Tax-Free Childcare scheme has jumped by 24% year-on-year, according to new figures released in HMRC’s annual report.

In March 2023, 477,000 families were supported with Tax-Free Childcare for 577,000 children. This compares with 384,000 families and 458,000 children recorded in March 2022.

Commenting on the new figures, Paul Falvey, a tax partner at accountancy and business advisory firm BDO said:


“It’s encouraging that more working parents are finding out about their entitlements to claim Tax-Free Childcare and set up an account. However, the big increase we’ve seen in the last year may also reflect the fact that more working families are struggling with the cost of living and are keen to minimise costs wherever they can.

“For eligible working parents, taking advantage of Tax-Free Childcare makes good financial sense. You can get up to £2,000 a year (£500 every three months) for each of your children who are aged between 0 to 11 years old to help with the costs of childcare. We would encourage all those who haven’t yet signed up to do so.

“Tax-Free Childcare (TFC) is for working families, including the self-employed. Provided that you or your partner earn under £100k and at least the National Minimum Wage or Living Wage for 16 hours a week on average, then you should be eligible.


“It’s relatively straightforward to set up an online childcare account. Once it’s open, for every £8 paid into this account, the government will pay in £2. This money can then be used to pay childminders, nurseries, nannies and after-school clubs. Funds can also be used to pay for registered play schemes which could be very useful for working parents looking to cover the costs of activities during the long summer holiday.”

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