TAX FREE CHILDCARE: Less than half of eligible families accessing support

HMRC have published the statistics on the usage of their Tax Free Childcare offer for the 2021/22 tax year.

The Government scheme offers up to £2,000 a year per child towards childcare costs, including nursery provision.

The latest statistics show that only around half of the estimated 1.3 million eligible families are accessing the support they are entitled to, showing that 512,415 families accessed the support, a rise from the 374,135 in the previous year.

This increase saw the government reach its highest level of government top-up since the start of the scheme in 2017, when it spent £43 million on top-ups for families in March 2022, approximately £5 million more than last quarter’s peak of £37.9 million in November 2021.

Wales and Scotland also saw an increase rising from 12,270 the previous year to 17,825 and from 20,330 to 29,110 for each country respectively.

Jonathan Broadbery, NDNA’s Director of Policy and Communications said: “The latest report from HMRC shows that only about half of Tax-Free Childcare accounts are used and around 800,000 eligible families could be missing out on this financial support.

“Underspends for the scheme total more than £2 billion and with so many missing out this is clearly climbing. This is money earmarked to support families with their childcare costs and should be used to help childcare providers to support children who have missed out on so much learning over the last two years.

“We have heard from both parents and providers that the system is too complex. As families and nurseries face spiralling costs, the Government must look at simplifying the system so more providers can offer it and more children can benefit. For years, NDNA has been urging governments to streamline all childcare support into a single, online account or “childcare passport” for each child which parents can use to pay providers directly. This would also remove the need for local authorities to distribute funding, eliminating further underspends totalling £115m over the last three years.

“One major reason that take-up is much higher in England than in Wales and Scotland is that all families accessing funded childcare must create a Tax-Free Childcare account. We would encourage governments in Wales and Scotland to look at ways of joining up childcare support and increasing take-up in a similar way we have seen in England.”

Read the full list of statistics here

  • England
  • Scotland
  • UK
  • Wales
  • HMRC
  • tax free childcare

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