Martin Lewis says 800,000 families are missing out on 'free money' worth thousands

Martin Lewis has warned that 800,000 could be missing out on a scheme which provides them with up to £4,000 to help with costs.

In a recent episode of his Sounds podcast, Martin talked about the government's Tax-Free childcare scheme and urged parents to claim the benefit as 800,000 are missing out.

Martin has previously described the government's Tax-free Chilcare scheme as being "appallingly named" and "misleading". He also blames the name for the low take-up as it doesn't link to tax at all.

He reiterated this point again on the recent podcast saying: "800,000 eligible families do not claim Tax Free Childcare, even though this is basically free money. It's not free money being paid for by the state or the taxpayer. However it's free money for an individual to help with childcare.

"The problem with it is called Tax Free Childcare, but it's not about tax, and it's not tax free, and it's called tax free childcare, which is a political point made by the government who introduced it to try to say it was the equivalent to paying it from your pre tax income. But that's just baloney and bolderdash and any other B word you want to think of, right?

He added: "I think if we renamed it the 'working family childcare top up', because it's for working families only, it's for childcare, and it tops up what you pay, that gives people a better understanding. We've done a lot of research that shows if people understood it better, they would claim it more."

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The childcare scheme is an online account which parents and guardians pay into, and then they receive a top up payments from the Government. For every £8 you pay into the account, the Government will automatically add in £2 which you can put towards your childcare costs.

On the podcast Martin said: "So what tax free childcare is? It's basically an account where you save for childcare and then you get a bonus of 20p for every 80p you've added and that goes towards our childcare to and can be paid for whatever is relevant childcare."

The scheme helps pay for childcare for children up to the age of 11 years, or up to 16 if the child has a disability. If you’re eligible, you can get up to £500 every three months - up to £2,000 a year - for each of your children. If your child is disabled you could receive £1,000 or up to £4,000.

Childcare allowed under the scheme must be a registered provider such as nurseries, nannies, after school clubs and play schemes.

To be eligible, you must earn at least the minimum wage, for the equivalent of 16 hours a week. If you're in a couple, your partner must also earn this. Self-employed workers are also eligible if they earn this amount too. Both you and your partner also have to earn less than £100,000 a year to qualify.

This scheme is open to working families so you will not be able to get this help if you are claiming Tax Credits, or childcare vouchers. However, there are some exceptions for those who are not working.

For example, you may still be able to claim if one of you is working and the other gets Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or Employment and Support Allowance (ESA).

HMRC says it takes around 20 minutes to apply for the scheme and you can do this through the website. Once an account is opened, parents can deposit money immediately, so it is ready to be used whenever it is needed; and unused money in the account can be withdrawn at any time.

Going forward, you will need to make sure the detail on the account are up to date every three months to keep receiving the Government top ups. Martin said the scheme was "absolutely worth doing for anyone who qualifies"

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