MSE News

22,000 tax-free childcare payments delayed – here's what you need to know

Around 22,000 tax-free childcare payments have been delayed by up to eight days, leaving parents at risk of late payment fees from their childcare provider.

An issue with HM Revenue & Customs' (HMRC) payment system meant that standing orders from parents to their childcare providers, which were meant to be processed between Tuesday 30 October and Thursday 1 November, have not been paid.

HMRC says these payments should be received today (7 November) – more than a week after some of the payments were originally scheduled.  

This latest issue is just one of a long series of problems with the scheme, which was subject to a delayed roll-out and almost 1,000 official complaints in the three months after its launch.

See our Tax-Free Childcare guide for more information.

What is tax-free childcare?

Under the tax-free childcare scheme, parents and carers in the UK can open a special account to save for childcare costs for children under 12.

It's designed so that for every 80p the parent puts in, the Government will add 20p – effectively giving parents basic-rate tax back on what they pay, hence the scheme's name.

The scheme can be used to pay for up to £10,000 of childcare per child each year, equal to an extra £2,000 per child (up to £4,000 if the child is disabled) each year.

Parents can send payments to their childcare providers directly through their tax-free childcare accounts, which is where the latest problems with the scheme have arisen.

Confusion from parents

Parents and childcare providers have expressed confusion about the situation on social media:

What can I do if I'm affected?

HMRC says that all the affected payments have now been processed, and the money will be paid automatically by today.

If you've been charged late payment fees after your tax-free childcare was delayed, you can be reimbursed by calling the Childcare Service helpline on 0300 123 4097. This will be decided on a case-by-case basis.

You'll need to provide your details (including bank details) as well as any evidence of late payment fees, and correspondence from your childcare provider.

What does HMRC say?

An HMRC spokesperson said: "We have identified an issue which has resulted in delays to some tax-free childcare payments.

"We apologise for the inconvenience that this has caused to parents and providers. The affected payments have been processed.

"Childcare providers should receive payments on 7 November and we have contacted those affected by email."