Martin Lewis urges 800,000 UK households to claim 'free money'

Money Saving Expert Martin Lewis is urging 800,000 people to claim 'free money' as soon as they can. this week returned on his The Martin Lewis Podcast on BBC Sounds and Spotify with a Childcare Special aimed at helping parents make ends meet. There, he took his listeners through various tips to help boost their income and pay for ever-expensive childcare.

explained to his listeners how as many as 800,000 families who are eligible to get Tax-Free Childcare are still not claiming it, similar to how 700,000 pensioners who are eligible to claim aren't claiming that benefit. Tax-Free Childcare is actually a bonus paid by the Government to parents to help meet the cost of nursery or child minders.

For every £8 you pay in, the government adds a 20% bonus, effectively reducing your nursery bill by 20%.

It's open to parents who both work, but many parents don't claim the 'free money' even though they should, and Martin attributes the lack of take-up to its poor name.

Martin Lewis said: "800,000 eligible families do not claim Tax-Free Childcare even though this is basically free money (I mean it's not free money it's being paid for by the state or the taxpayer or however you want to frame that). But free money for the individual to help with childcare."

Martin went on to explain that the name could be to blame for the 800,000 people who don't claim it who should. He added: "Now one of my big starting points of the problem with it, it's 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 of paying it from your pre-tax income. But that's just baloney and balderdash and any other b-words you want to think of right?

"So what tax-free childcare is is basically an account where you save for childcare and then you get a bonus of 20p for every 80p you've added, from the state, that goes towards your childcare too and can be paid for whatever is relevant childcare who accepts it.

And it's absolutely worth doing for anyone who qualifies who doesn't get Universal Credit (you can only have one or the other and if you can get Universal Credit, Universal Credit is better).

"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 implicitly gives people a better understanding and we've done a lot of research that shows if people understood it better, they would claim it more."

The government's Tax Free Childcare website says: "You can get up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the costs of childcare. This goes up to £1,000 every 3 months if a child is disabled (up to £4,000 a year).

"If you get Tax-Free Childcare, you'll set up an online childcare account for your child. For every £8 you pay into this account, the government will pay in £2 to use to pay your provider."