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Thousands of parents not using their Tax-Free Childcare accounts

Tax-Free Childcare Families
Fewer than half of parents with a Tax-Free Childcare account are using it, reveal new Government statistics.
The HMRC figures show fewer than half of parents are using their Tax-Free Childcare account
The HMRC figures show fewer than half of parents are using their Tax-Free Childcare account

The figures for the last quarter – up to 31 March 2021, show that while the number of parents with a Tax-Free Childcare (TFC) account has increased, a total of 48 per cent are actually using it.

As of March, 282,000 families used TFC, compared with 248,000 families in December 2020.

According to the figures from HMRC, the percentage of open TFC accounts being used were steadily increasing until April last year when they fell sharply due to the Covid-19 pandemic and restrictions put in place to reduce the spread of the virus.

They show that during the first Covid-19 lockdown there was a ‘significant’ decrease in account use from 45 per cent in March 2020 to only 13 per cent two months later.

However, this decrease was largely reversed in September 2020, with usage back to 44 per cent and 47 per cent in December, before dropping again when new restrictions, including the closure of schools to all but children of keyworkers and those considered vulnerable, were put in place in January this year. Restrictions began to be lifted again in March.

The statistics also reveal:

  • There was a sharp increase in the number of families with a self-employed parent using TFC to a new high of over 36,000 families at the end of March.
  • The Government spent £33m on top-up for families at the end of this quarter - £7.6m more than in December 2020.

Sector response

Jonathan Broadbery, Director of Policy and Communications at National Day Nurseries Association (NDNA) said: 'Any take up of Government support that helps families and ensures children can access high-quality early education is important because it makes such a difference to children’s outcomes and development.

‘With less than 50 per cent of open accounts actually being used, the Government must do more to encourage parents across the country to sign up and take advantage of this financial support.’

He went on to call for the ‘hundreds of millions’ in unspent Tax-Free Childcare funding to be re-invested in early years.'

  • The latest Government statistics on TFC usage are available here