More than £18mn could be languishing in unused Tax-Free Childcare accounts, a Freedom of Information request by Royal London suggests.
According to the FOI, the average unused balance before the lockdown (March 9 2020) was £83.75 per account.
Latest quarterly statistics on the use of tax-free childcare accounts, published today (Wednesday May 20) show that 218,000 families had used tax-free childcare accounts in March, down from a high of more than 220,000 in January, as lockdown began and nurseries, childminders and after school clubs were forced to close their doors.
The accounts offer a 25 per cent government top-up towards the cost of childcare for parents of under 12s, meaning that for every £8 paid in by parents, a further £2 is added by the Government, up to a maximum top-up of £2,000 a year.
Payments to the accounts are made manually by parents, the top-up is added by the Government, then the parent pays their provider.
However as many parents are not currently using their usual childcare provision and stopped suddenly at the end of March, Royal London is urging parents to check whether they have an unused balance in their Tax-Free Childcare account that they might wish to withdraw back into their current account.
Becky O’Connor, personal finance specialist at Royal London, said: “There were fewer parents paying for childcare using tax-free childcare accounts in March, as nurseries and childminders closed their doors at the beginning of lockdown and children were required to stay at home."
“We are urging parents to check whether they have an unused balance in their tax-free childcare account. If they do not need to pay for childcare imminently, withdrawing any unused balance and putting back in their current accounts could help the family finances.”
Notes to Editors
- The Government publishes quarterly statistics on the use of tax-free childcare here: https://www.gov.uk/government/statistics/tax-free-childcare-statistics-march-2020
- Details of eligibility for tax-free childcare https://www.gov.uk/tax-free-childcare
- FOI to HMRC ref FOI2020/00466 – please use contact details below to request a copy
For further information please contact:
Becky O’Connor, Personal Finance Specialist
- Email: Rebecca.O'Connor@royallondon.com
- Tel: 0203 2725 434
- Mob: 07967 613925
About Royal London
Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £130 billion, 8.8 million policies in force and 4,046 employees. Figures quoted are as at June 2019.
At Royal London, we’re proud to champion the value of impartial advice. We believe it plays a crucial role in connecting people with the products that are right for them – and is key to delivering better outcomes and experiences for our customers. At the same time, it helps to build trust in our products and services.
Royal London works alongside advisers not in competition with them. That’s why we’ve made some key commitments to the intermediary market. You’ll find more detail on our commitment to advisers at http://adviser.royallondon.com/campaigns/our-commitments/