Latest figures show increase in use of Tax-Free Childcare scheme but it’s doesn’t go far enough for many families

Approximately 484,000 families used Tax-Free Childcare for 580,000 children in November 2023, compared to 456,000 families using Tax-Free Childcare for 547,000 children in September 2023.

The government adds on an extra £2 for every £8 a parent pays into their Tax-Free Childcare up to a maximum of £2,000 per child per year. For disabled children the maximum is £4,000 per year.

The Tax-Free Childcare scheme statistics are published by HMRC every quarter.

Significant number of families unaware

The scheme aims to provide support with childcare costs to working parents and although there has been an increase, it is no where near reaching the number of families it should be.

The government also stated that it had spent £46.2 million on top-up for families in December 2023,
£4.7 million higher than in December 2022 and that more families used a Tax-Free Childcare account in October 2023, compared to November 2023. 

However, for children aged 0 to 3, account use increased in October 2023 before decreasing in November and December 2023.

The Early Years Alliance highlighted concerns that there is still a lack of awareness and uptake of the scheme.

“Although today’s figures show that the number of families using tax-free childcare have increased, the fact remains that significant proportion of families still do not use the scheme,” said Neil Leitch, chief executive of the Early Years Alliance.

“Despite this policy now being in its seventh year, countless families are still unaware that they are eligible to receive support through the scheme – or that it exists at all. What’s more, it remains an entirely regressive policy, with parents with more disposable income receiving more financial support than those with less.” 

He added: “At the time when early years providers are being forced to increase fees due to sustained underfunding financially – and with the sector set to be put under even greater pressure when the early entitlements are expanded in a little over a month – it’s clear that the money used to finance tax-free childcare would better benefit both families and providers if it was used to adequately fund early entitlement offers 

“Given that we are now just weeks away from the start of the entitlement expansion, support for families towards rising early education and childcare costs has never been more important. As such, we urge the government to consider redirecting the funding used for this scheme to ensure that it benefits families most in need of support.”