Martin Lewis is encouraging hundreds of thousands of families in the UK to take advantage of a government scheme that many are missing out on. On his podcast, the financial expert highlighted that around 800,000 families are eligible for Tax-Free Childcare, yet they haven’t claimed it. He described the scheme as “basically free money” — not truly free, as it’s funded by taxpayers, but free in the sense that eligible parents don’t have to pay it back.
Through this scheme, families can receive up to £500 every three months per child — or up to £2,000 a year — to help cover childcare costs. For families with disabled children, that figure rises to £1,000 every three months, or £4,000 per year. The system works by setting up an online childcare account. For every £8 a parent pays into the account, the government adds an extra £2. This balance can then be used to pay for approved childcare services like nurseries, registered childminders, and even after-school or holiday clubs.
Martin stressed that many families don’t understand the scheme because the name “Tax-Free Childcare” is confusing. He explained that it has nothing to do with taxes in the traditional sense, and it’s not a tax refund or deduction — it’s a straightforward bonus that supports working families.
He also clarified that this scheme is not compatible with Universal Credit or childcare vouchers. Families can only receive one of these types of support, and for those eligible for Universal Credit, that option may actually provide more financial help.
To qualify, both parents (or a single parent) must be working and earning at least the minimum wage for 16 hours a week on average, but not more than £100,000 per year each. Children must be 11 years old or younger, or under 17 if they are disabled.
Martin concluded by encouraging anyone who thinks they might be eligible to check, saying the support could make a huge difference in managing the rising costs of childcare — especially during school holidays and term time.