‘Over half of parents don’t know what tax-free childcare is’

A workingmums.co.uk poll shows many parents still don’t know what tax-free childcare is two years since it was launched.



Over half of working parents don’t know what tax-free childcare – one of the government’s flagship policies – is, according to a workingmums.co.uk poll.

The poll shows 52% of parents don’t know what tax-free childcare is, despite it being in place since April 2017.

What is tax free childcare?

Tax-free childcare enables eligible parents to get up to £500 every three months (£2,000 a year) for each of their children under 12 to help with the costs of Ofsted-registered childcare. Parents have to pay up front and claim back the money.

The scheme replaces childcare vouchers and the aim is to make that kind of support available to more parents, given not all employers provide them and given it is available to the self employed. Voucher schemes have been closed for new claimants.

Who is using tax free childcare?

Of the 48% of respondents to workingmums.co.uk’s poll who have heard of tax-free childcare only 19% say they use it. Seven per cent say they can’t afford to pay childcare costs upfront. Six per cent say the system is too complex and 15% who know about it say they don’t need it.

Tax-free childcare has faced several problems. A survey by workingmums.co.uk taken when it was first launched showed many parents struggling with registering on the website. Last November HMRC confirmed that the number of formal complaints from parents experiencing technical issues with tax-free childcare had increased by 30% since last December. It also suffers from a perception that it is aimed more at wealthier parents, given the amount of money you can claim back depends on how much you are able to spend.

The Telegraph reported last week that the Government was “on course to make a monumental saving as a result of the scrapping of childcare vouchers”. It said this was in large part because of the low take-up of the scheme.

In December, only 91,000 scheme accounts were used by parents – far below the 415,000 the Treasury had budgeted for by October 2017.

Cost benefits analysis before the scheme came in also showed there would be some winners and some losers as a result of the scheme.

Childcare organisations have claimed the Government is not doing enough to promote the scheme. The Childcare Voucher Providers Association has recently called for voucher schemes to be re-opened.

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