AJ Bell press comment – 18 October 2022
Laura Suter, head of personal finance at AJ Bell, comments on the latest tax-free childcare figures as government encourages families to register:
“Far too many parents are still missing out on a £2,000 windfall from the government towards their childcare costs, or more if they have multiple children. The latest figures show 391,000 families claimed tax-free childcare in June, but that’s still shockingly short of the 1.3 million families who are thought to be eligible.
“The £2,000 of funding per child could pay for just over seven weeks of childcare* costs for a child under two in full-time nursery – not a huge dent in the annual bill but a decent amount of help for families.
“The government had previously pledged** more support for families with childcare costs, as part of its bid to get more parents working and boost the UK’s productivity. It feels likely that any of these measures that were going to cost the government money have now been consigned to the scrapheap, so parents should really claim the maximum support that’s currently available to them rather than relying on more coming down the pipeline.
“The tax-free childcare system isn’t without its faults, from the confusing name to the need to recertify your eligibility every three months. But with costs rising around us and many families feeling strapped for cash, it’s worth jumping through the hurdles to claim your free cash.”
*The average price of 50 hours of care a week for a child aged under two in nursery is £269.86 across Great Britain, according to the Coram Childcare report
**Kwasi Kwarteng’s ‘Growth Plan 2022’ speech on 23 September 2022 – “Over the coming weeks, my Cabinet colleagues will update the House on every aspect of our ambitious agenda. Those updates will cover: the planning system, business regulations, childcare…”
Tax-free childcare explained: Families can claim up to £2,000 a year per child towards childcare costs, split into £500 per quarter. For every £8 you pay into the account, the government will add £2. Parents must be working and earning the minimum wage for 16 hours a week or more but earning less than £100,000 per parent. More details here: https://www.gov.uk/tax-free-childcare
