HMRC has agreed to offer compensation to parents unable to apply for new government-funded tax free childcare schemes due to IT glitches.
Parents were required to log onto the Childcare Service website to sign up for two new childcare schemes – the Tax-Free Childcare scheme and the 30 hours’ free childcare. However, from the outset the website has been plagued by technical issues which have prevented parents from completing applications.
HMRC have apologised for the problems and agreed to make a one-off compensation payment to parents who were unable to log into their account, or did not receive a decision within 20 days of applying.
Tax Free Childcare
The new Tax-Free Childcare scheme was launched in April. Parents, other family members and employers can pay money into an online childcare account (set up through the government’s Childcare Service website) to cover the cost of childcare with a registered provider.
For every £8 paid into the account, the government will top this up with an additional £2, up to £2,000 support per child per year (or £4,000 for a disabled child). The government top-up is the equivalent of the tax most people pay – 20% – which gives the scheme its “tax-free” name.
30 hours’ free childcare may also be available to working parents of three and four year olds (1,140 hours in total).
Craig Walker, Senior Tax Manager at Hawsons commented: “Thousands of working parents are missing out on government help towards childcare costs. I would encourage all parents to check whether they are eligible to apply for the new government-funded childcare schemes”.
How to claim compensation
Parents who were unable to access their online childcare account, or did not receive a decision within 20 days of applying, will need to fill in an online form to make a claim for compensation.