HMRC paying out £500 'top up' to parents for summer holidays

HMRC will pay out a £500 top-up to help mums and dads cover the costs of summer childcare during the school holidays. 740,000 families used Tax-Free Childcare for 966,000 children during the 2023/24 financial year, data shows..

You can get up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the costs of childcare. This goes up to £1,000 every 3 months if a child is disabled (up to £4,000 a year), according to the government website.

If you get Tax-Free Childcare, you’ll set up an online childcare account for your child. For every £8 you pay into this account, the government will pay in £2 to use to pay your provider. You can get Tax-Free Childcare at the same time as 15 or 30 hours free childcare if you’re eligible for both.

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You can use it to pay for approved childcare, for example childminders, nurseries and nannies or after school clubs and play schemes Your childcare provider must be signed up to the scheme before you can pay them and benefit from Tax-Free Childcare.

Your eligibility depends 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 and your immigration status. Over the next 3 months you and your partner (if you have one) must each expect to earn at least £2,379 if you’re aged 21 or over, £1,788 if you’re aged 18 to 20 or £1,331 if you’re under 18 or an apprentice.

Your tax credits will stop immediately if you successfully apply for Tax-Free Childcare. You (and your partner, if you have one) will also have to cancel your Universal Credit and childcare vouchers. HMRC warns: "Before you apply, check if it's the right option for you."