Martin Lewis issues urgent warning to 800,000 parents missing out on £2,000 to help with summer childcare costs

MARTIN Lewis has issued an urgent warning to 800,000 parents missing out on thousands of pounds worth of childcare support.

The founder of MoneySavingExpert.com is urging parents to claim tax-free childcare this summer.

Rex

Tax-free childcare rewards parents with £2 for every £8 added to their personal account[/caption]

Speaking on ITV‘s This Morning, Martin said: “There’s a scheme called tax-free childcare, which has nothing to do with tax and isn’t tax-free.

“It’s terribly named, awfully confusing, and puts people off.

“But there are 1.3million people eligible for it, and only 500,000 claim it.

“Over 800,000 that are eligible don’t claim, and it can be really substantial money.

“I would actually rename it, and I’m campaigning to do so, something more like Help to Pay for Childcare, which is a better description.

“Now, the reason it’s important right now is, while you can use it for nursery care and childminders throughout the year, if you’re going to send your kids over summer to, say, could even be a football camp or a drama camp or a summer camp.

“As long as it is Ofsted or Early Years Register or Childcare Register regulated, then you can use the tax-free childcare scheme.”

Tax-free childcare rewards parents with £2 for every £8 added to their personal account.

You can receive a maximum of £2,000 in free cash a year from the government per child or £4,000 if your child is disabled.

The child has to be under the age of 12 or 17 if they are disabled.

The money has to be used to pay for childcare, including nurseries, childminders or after-school clubs.

It can also be used to cover the cost of care outside of term time or for out-of-school activities.

For example, if your childcare costs are £1,000 a month, you could pay £800 into your tax-free childcare account, and the government would cover the remaining £200.

You qualify based on your personal circumstances, including your income.

Your eligibility will depend on:

• Whether you’re working (employed, self-employed, or a director)
• Your income (and your partner’s income, if you have one)
• Your child’s age and circumstances
• Your immigration status

As a baseline over a three-month period you and your partner (if you have one) must each expect to earn at least the following:

• £2,379 if you’re aged 21 or over
• £1,788 if you’re aged 18 to 20
• £1,331 if you’re under 18 or an apprentice

You can claim tax-free childcare at the same time as 15 or 30 hours free childcare.

However, you cannot get tax-free childcare while claiming working tax credit, child tax credit, Universal Credit, or childcare vouchers.

Which scheme you’re better off for you will depend on your own personal financial situation.

You can use the government’s childcare calculator to work out which type of support is best for you by visiting www.gov.uk/childcare-calculator.

OTHER CHILDCARE HELP

Up to 30 free childcare hours

You may be able to get free childcare for your child aged nine months to four years old if you live in England.

The number of hours working parents can claim depends on the age of their child.

If your child is:

• Nine months to two years old, you can get 15 hours per week of free childcare
• Three to four years old, you can get 30 hours per week of free childcare

From September 2025, children aged nine months to two years old, will qualify for 30 hours per week of free childcare

To qualify, you’ll need to earn at least the equivalent of the national minimum wage for 16 hours a week.

Both parents will need to earn the equivalent of at least £166 per week, each with a taxable income of no more than £100,000. 

Your two-year-old can also get free childcare if you live in England and get any of the following benefits:

• Income support
• income-based jobseeker’s allowance (JSA)
• income-related employment and support allowance (ESA)
• Universal Credit and your household income is £15,400 a year or less after tax, not including benefit payments
• The guaranteed element of pension credit
• Child tax credit, working tax credit (or both), and your household income is £16,190 a year or less before tax

Universal Credit childcare element

Parents on Universal Credit and in a paid job can have up to 85% of their childcare costs covered, up to £1,014.63 a month for one child and £1,739.37 a month for two or more children.

It doesn’t matter how many hours you work.

If you live with a partner, you both need to work to qualify.

You usually have to pay for the childcare and claim back the costs, but if you go back to work or increase your hours you can request for the money to be paid upfront.

Child benefit

You can get child benefit if you’re responsible for a child aged under 16, or if they are under 20 and in approved education or training.

Child benefit is currently worth £25.60 a week for the eldest child or only child. For each subsequent child, parents get £16.95 a week.

The cash is paid every four weeks and there’s no limit to how many children you can apply for.

Bear in mind though, those who earn more than £60,000 a year have to start paying back some of their child benefit through the High Income Child Benefit Charge (HICBC).

If you or your partner earns £80,000 or more, you have to pay all your entitlement back.

You have to pay the HICBC to HMRC through self-assessment.