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Almost 1 million paid to parents who couldn't access Tax-Free Childcare

Almost 1 million has had to be paid manually to parents in place of Tax-Free Childcare payments they should have received automatically, since the Government scheme began in April last year.

Tax-Free Childcare allows you to open an account to save for childcare costs, to which, for every 80p you deposit, the state adds 20p. But due to several glitches with the HM Revenue & Customs website, many parents struggled to access payments or even set up accounts, and have been paid 966,666 manually as a result.

This is in addition to the 38,949 compensation paid to parents for the inconvenience and expenses, such as telephone calls to the helpline.

The stats, which cover up to 22 December last year, were revealed by Chief Secretary to the Treasury Liz Truss, in response to a question in Parliament.

Truss also revealed that up until the same date HMRC had received 3,496 complaints from parents who had experienced technical issues with the childcare service.

See Tax-Free Childcare for more information.

What is Tax-Free Childcare?

Under the Tax-Free Childcare scheme, parents and carers in the UK can open an account where, for every 80p they deposit, the state adds 20p.

In total the state can add up to 2,000 per child per year (or up to 4,000 if your child has a disability) so including what you deposit, you can use the scheme to pay for up to 10,000 of childcare per child each year.

It's worth noting you can only get a maximum top-up of 500 every three months, but the state's extra 20% is added at the point you put money into your Tax-Free Childcare account, not when you spend it.

So if you don't need to pay for childcare year-round, and instead only do so seasonally, to avoid missing out on any state top-up, put money into the account throughout the year. This way you'll earn the max amount of top-up as you go, and you can spend it only when you need to.

How to claim if you've been unable to access your account

If you've been unable to access Tax-Free Childcare, the easiest way to claim your money or ask for compensation is to use this link.

You can also call HMRC on 0300 123 4097.

You will need the following to make a claim:

What problems has the scheme faced?

The Tax-Free Childcare scheme has been riddled with problems, mainly affecting its website. A timeline of issues can be seen below:

What does HMRC say?

An HMRC spokesperson said: "More than 340,000 parents have successfully opened a childcare account, and are benefiting from new forms of Government childcare support, which will cut thousands of pounds off bills for millions of households, supporting parents to return to or remain in work.

"If any parent is having a problem or needs to speak to us, they should call us on 0300 123 4097. HMRC can reimburse parents in lieu of their top-ups to ensure that nobody is left out of pocket."