HMRC delays cost me £323 – hundreds of thousands of parents are at risk

I have a love-hate relationship with tax-free childcare. I love (and need) the up to £2,000 a year per child that it gives me towards childcare – but I hate how complex and confusing it is to use. I am one of the thousands of parents who has missed out on payments due to delays in processing applications via HMRC. Shorts In March, when I switched from a employed role to being self-employed, I checked I was still eligible. As a single mum to three-year-old twins, it is a much-needed benefit to help reduce my eye-watering £1,600 a month nursery bill. I read that if you’re self-employed you don’t have to confirm your earnings for the first 12 months. This seemed simple, but little did I know that this joy was to be short lived. Suddenly my tax-free childcare was revoked in May. Despite registering myself as self-employed, I was deemed ineligible for the scheme. After checking HMRC’s website, reconfirming my details and waiting patiently for the 10 days it said it would take to process my application, I realised I was being ghosted by HMRC. I rang the helpline on the 12th day and the customer service adviser confirmed that I actually needed to reapply for the childcare instead of reconfirming details – adding there was a delay in processing applications. I was confused, but dutifully did as they asked. I waited again. On day 25 I took matters into my own hands and contacted the press office – something I realise is a huge privilege as a journalist. Tara Evans, with her daughter Sienna, said the application process with HMRC took much longer than expected In this time, as my access to tax-free childcare had been revoked, I had paid £323 extra in April that I couldn’t get back – plus I had a very imminent nursery bill due to be paid. Within a couple of days, HMRC had called me, asked a few questions about my new self-employment and soon my tax-free status was restored. But I wondered how lengthy the delays were for other parents – and how much it could have cost them. Currently, 602,000 families apply for tax-free childcare so I imagined it would be quite a lot. I sent off an FOI to HMRC to find out the average time it takes to process an application. It claims on its website: “10 days if extra checks are needed”. But the FOI revealed, on a three month period, that the average is 19 days with the vast majority taking more than 10 days. HMRC says the processing times vary, but at the moment eligibility applications are being processed in five days. It may seem like a small delay, but to the hundreds of thousands of parents who rely on the benefit it could have a real impact on their finances. How does tax-free childcare work? Tax-free childcare is a government scheme that can cut the cost of childcare by 20 per cent. Parents pay money into an online childcare account and, for every £8 they put in, the government adds another £2. You then use the account to pay your childcare provider. You can get a maximum government top-up of £500 every three months for each child – worth up to £2,000 a year. For a disabled child, this rises to £1,000 every three months, or £4,000 a year. For example, if your childcare bill is £1,000, you could pay £800 into your tax-free childcare account and the government would add £200. Who is eligible? You can usually claim if: Your child is aged 11 or under You are working, including if you are self-employed. If you have a partner, you will usually both need to be working. Each parent expects to earn at least the equivalent of 16 hours a week at the National Minimum or National Living Wage over the next three months. Neither you nor your partner expects to have an adjusted net income of more than £100,000 in the current tax year. What childcare can you use it for? Tax-free childcare isn’t just for nursery bills. You can use it towards approved childcare including: Nurseries and registered childminders Registered nannies Breakfast and after-school clubs Holiday clubs and playschemes Some childcare provided by registered schools Your provider must be registered for tax-free childcare before you can pay them through the scheme. You can also use tax-free childcare alongside eligible government-funded childcare hours, helping to cover additional childcare costs outside your funded hours. How do you claim? You need to apply through the Government’s childcare service and open a tax-free childcare account for your child. Once the account is open, you can pay money in by bank transfer, standing order or direct debit. The government top-up is added to your account and you can then use the balance to pay your childcare provider. You must log into your childcare account and reconfirm your details every three months to show that you are still eligible. If you fail to reconfirm, your tax-free childcare payments can stop, so make a note of the deadline or set yourself a reminder. An HMRC spokesperson said: “We want people to claim the support for childcare costs that they’re entitled to, and we process most applications within 10 working days. We’re currently processing them within five days.”