The latest statistics from HRMC show that approximately 484,000 families used Tax-Free Children in November 2023, this is an increase of 60,000 on the year before.
According to the data, the Government spent £46.2 million on top-up for families in December 2023. This is against a yearly forecast of £1 billion for Tax-Free Childcare for 2023-24.
It also shows that fewer than half of parents with an open Tax-Free Childcare account are actually using it. One reason for this could be if parents have switched to universal credit and getting money towards their childcare costs, meaning they are unable to claim money through Tax-Free Childcare too.
Despite the scheme being in its seventh year, the Early Years Alliance (EYA) said that ‘countless families are still unaware they are eligible to receive support, or that it exists at all, with a significant proportion’ still not taking advantage of the scheme.
The National Day Nurseries blamed the ‘complexity of the system’ on why so many parents continue not to use Tax-Free Childcare and renewed its call for funding to put into one ‘simple, online account for each child’.
EYA chief executive Neil Leitch went on to argue that the money spent on Tax-Free Childcare would better benefit families and providers if it was used to ‘adequately’ fund early entitlement offers, and urged the Government to consider redirecting the funding. The NDNA backed his call.
When Nursery World approached The Treasury for a comment about how any underspend from Tax-Free Childcare will be used, it said, ‘Last year we announced [sic] single biggest childcare investment this country has ever seen, saving parents up to £6,500 on average and helping tens of thousands back to work.
‘Take-up of Tax-Free Childcare continues to grow and roughly 60,000 more families used it in November 2023 compared to the year before.’