Martin Lewis: Are you one of 800,000 parents missing out on up to £2,000 a year towards childcare costs?

Huge numbers are missing out, as MoneySavingExpert.com founder Martin Lewis explained in the Summer Special of his live ITV show.

ITV's The Martin Lewis Money Show Live – Tuesday 20 May

From The Martin Lewis Money Show Live on Tuesday 20 May 2025 courtesy of ITV. All rights reserved. Watch the full episode on ITVX.

Transcript of what Martin said on the show

Martin: "So look, if you're paying for childcare this summer – or frankly, year round, but it's a summer show, so I pegged it that way. If the childcare you're using is Ofsted or equivalent in other UK nations – registered nurseries, school holiday clubs, childminders etc – there are 800,000 parents who are eligible; missing out on the hideously misnamed 'Tax-Free Childcare'.

"I say it's hideously misnamed because it's nothing to do with tax and it's not tax-free. [Martin shrugs.] I would call it, by the way, the 'Working Families Childcare Top-up', because it's for working families and it's to top up on what you pay for childcare, and it's framed much better and I'm lobbying to change that."

Check if you can get a boost of up to £2,000 a year via 'Tax-Free Childcare'

"Now, it's only for under 12s, or under 16s if the child has a disability. Do check whoever you're paying would take tax-free childcare payments. Almost all of them do, but it's worth checking.

"You must both be working, or if you're a single parent, you must be working, and you need to earn the equivalent of 16 hours at national minimum wage – which depends on your age – but for someone aged over 22, is around £850 or more a month.

"But if one of the parents is earning over £100,000 a year, you're not eligible. Your neighbours might be earning £99,000 each in a couple. They get it, you don't. Ridiculous system. Anyway, you can tell I've got issues on this.

"But this is the most important bit: for each 80p you put in via the Gov.uk Tax-Free Childcare account, the state adds 20p on top. That's a 25% boost on what you're paying up to a maximum £500 a quarter, which adds up to £2,000 free per year.

"Check it out if you're paying for childcare, even if it's only childcare for the summer holidays. [If] you're sending your kids to a holiday club with the school that's Ofsted-registered, you can utilise this."

If you're on Universal Credit and working, claim back some of your costs for under 17s

"And the same is true if you're on Universal Credit and working. You can only choose one of these [claiming Tax-Free Childcare or claiming some of the costs for under 17s]. If you're on Universal Credit and working, this [claiming some of your costs] wins. Don't do that one [claiming Tax-Free Childcare], this wins.

"Then, you can claim some of the costs for under 17s here, up to 85% of the cost, but up to a maximum amount: just over £1,000 if you've got one child, nearly £1,800 if you've got two children.

"You do this via your Universal Credit account. You just claim it online, but sadly it is paid for in arrears. Again, it's the same rules about working, you have to be working or both of you working if you're in a couple."

Got a child aged four to 16 on free school meals? Check if your council can help

"As a separate issue – just, important – if your child is aged four to 16 and gets free school meals in England, check for local help and do it sooner. Councils have to provide enriching activities and one free meal per day. Search your council's name and 'holiday activities and food programme'. Do the search combined and see what it's doing.

"Some of them – you know, they have limited numbers, so the sooner you get in the better – some are closing and some haven't opened yet. And if you're in the rest of the UK – Scotland, Wales and Northern Ireland – they don't have the same scheme but many local councils run similar schemes and that's worth checking out."

From September, more parents will be able to get 30 funded hours of childcare

Jeanette Kwakye, Martin's co-host: "Yeah, we've had this coming in from Owen, who knows this all too well: 'We only discovered Tax-Free Childcare in October 2023, two years after our son started nursery. By then we'd paid £11,361 in fees and had we known about TFC (Tax-Free Childcare), the Government would have contributed £2,272."

Martin: "Yeah. It just shows you how important and how miscommunicated it is. Worth also noting that the 30 funded hours for aged nine months to five-year-old children for working parents in England starts this September."