£18m could be sitting in unused tax-free childcare accounts

More than £18m could be sitting in unused tax-free childcare accounts, according to a Freedom of Information (FOI) request by Royal London.

The FOI suggested the average unused balance before 9 March 2020 was £83.75 per account.

The latest quarterly statistics on the use of tax-free childcare accounts, published today by the Government, showed 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% government top-up towards the cost of childcare for parents of under 12s, meaning that for every £8 paid 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 has urged 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.

Royal London personal finance specialist, Becky O’Connor, commented: “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.”

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