Digital Tax Matters

Latest Updates To Tax-Free Childcare & Child Benefits

Dad flying plane with young son

Recent updates to the Government’s childcare and benefits schemes could have a significant impact on working families.

Maximising Your Childcare Support & Benefits In 2025

From increases in tax-free childcare contributions to key deadlines for extending child benefit, it’s important for parents to understand how these changes may affect them. Below, we break down the key points and what you need to do to stay on top of your entitlements.

Tax-Free Childcare: What’s Changed?

There have been changes to the Government’s tax-free childcare scheme, first introduced in 2017, which offers significant benefits to eligible working families. The scheme can now contribute up to £2,000 per year per child, or £4,000 if the child has a disability, towards wraparound childcare and holiday clubs.

How The Scheme Works:

Every three months, for every £8 deposited in a tax-free childcare account, the Government will top it up by £2 up to a maximum of £500 (or £1,000 if the child is disabled).

Eligibility Criteria:

To qualify:

Extending Child Benefit For Older Children

Parents have until August 31st to extend child benefits for their 16 to 19-year-olds if they are continuing full-time education from September. For 2025-26, this is worth up to £1,355 per year for the first, or only child, and up to £897 per year for each additional child.

The extension can be done through the HMRC app or on the GOV.UK website. If they do not renew their claim by this date, payments will automatically stop.

High-Income Child Benefit Charge (HICBC)

As a parent, if you or your partner earns £60,000 or more, the higher earner will be liable to repay some or all of the child benefit via the High-Income Child Benefit Charge (HICBC). In this instance, where one of the parents is not working and the child is under 16, there are two options:

It is essential to note that once the child turns 16, they will be registered for National Insurance, which means the qualifying contributory years will no longer be available to the parent.

The Next Steps For Parents

The latest changes to childcare and child benefit schemes offer both opportunities and important decisions for families to consider. From maximising government contributions towards childcare to protecting long-term benefits, taking action before key deadlines is essential.

If you are unsure about your eligibility or the best approach for your circumstances, seeking professional advice is key. Our accountants are highly experienced and can help you navigate these updates to maximise the benefits of these valuable schemes while avoiding unexpected charges. Contact us today to book an appointment.