Just 160,000 using Tax-Free Childcare as technical problems persist
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About a third of the number of families initially expected to use Tax-Free childcare have done so in the last tax year, according to figures released by HMRC today. The 160,000 families using Tax-free Childcare is well short of the expected 415,000 families the government had hoped to achieve by December 2017 at the out-set. Tax-free childcare has struggled with technical issues and was not fully rolled-out to all eligible children until March 2018, six months after its launch. Today鈥檚 figures arrive on the back of concerns raised to the Early Years Alliance by providers who say technical glitches have made it impossible for them to tell which parents Tax-free Childcare payments had come from. In a section titled, 鈥楳aking Tax-Free Childcare payments will be easy鈥, on the government鈥檚 website, the HMRC tells providers 鈥淸Parents will] be able to send you payments directly from their Tax-Free Childcare accounts to your bank account (via BACS). Each child will have a Tax-Free Childcare reference number. Parents can let you know their reference number to help you identify their payments.鈥 However, according to at least one provider, the latest tranche of income received via the scheme was completely anonymised. When contacted by the Alliance, the HMRC could not reveal how many providers had been affected and a spokesperson said: 鈥淲e apologise for the inconvenience caused by this issue with payment references. We are working hard to resolve it and if parents or childcare providers have problems, they can call us on 0300 123 4097 and we will help them.鈥 This latest glitch will be hugely concerning to providers, some of whom receive tens of thousands of pounds of payments via the Tax-Free Childcare portal, and will leave those affected facing a significant administrative task to reconcile these anonymised payments with parents. This is just the latest in a long line of technical issues that have dogged Tax-Free Childcare since its 2017 launch, including glitches which led to providers not being paid in November last year. Following last year鈥檚 Budget, the government revealed that poor take up of the offer had meant the policy had an underspend of 拢600m, money which was returned to the Treasury. Commenting on today鈥檚 figures, the Early Years Alliance鈥檚 chief executive, Neil Leitch, said: 鈥It now seems inevitable that there will be yet another underspend on this failing government policy. It鈥檚 imperative that any Tax-free Childcare surplus finds its way to the families and providers currently subsidising the 拢662 million shortfall in the government鈥檚 early years funding, rather than being pocketed by the Treasury 鈥 something that simply cannot happen again.鈥 Responding to the news of a technical glitch leaving providers unsure of parent payments, Neil said: 鈥This latest change to the payment system seems to have taken place without communication, consultation or testing with the sector. Given the HMRC鈥檚 track record of technical problems, this is not good enough. There鈥檚 no doubt this will have caused an additional, significant administrative burden for providers at a time when they are preparing for the new term.鈥 Tax-Free Childcare aims to provide help with childcare costs for eligible working parents. It can be used to pay for approved childcare, such as childminders, nurseries and nannies, after school clubs and play schemes, and home care agencies. For every 拢8 a parent pays into their Tax-Free Childcare account the government will add an extra 拢2, up to a maximum of 拢2,000 per child per year. For disabled children the maximum is 拢4,000 per year. Tax-Free Childcare can be accessed at the same time as 30 hours free childcare if parents are eligible. ENDS A link to the new statistics report is here: ENDS About the Alliance
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