HMRC estimates that around 1.3 million families in the UK would be eligible for help with their childcare costs through tax free childcare, but current take-up is significantly below the original forecast: as of December 2020, 248,000 families used the scheme to pay a childcare provider for 287,000 children.

To be eligible, parents must each earn at least the equivalent of 16 hours a week at the national minimum wage but have an income of no more than £100,000 per year. Eligible parents can open an online childcare account and for every £8 they pay in, the government will add £2, up to a maximum of £2,000 per child each year, until they reach12 years old, or £4,000 for a disabled child until they reach 17 years old. The subsidy is available to high earners with a cap on applicants earning over £100,000.

The research, based on a focus groups, proposed a number of recommendations to improve take-up and awareness.

This includes changing the tax free childcare name to remove negative associations with ‘tax’, confusion about what the scheme is, and perceptions of restricted eligibility and administrative burden.

There was support for a name change to ‘working parents childcare top-up’ to convey eligibility, relevance, ease and flexibility as well as helping parents understand the nature of the scheme. Accompanying messaging should convey the simplicity of the process and mechanism.

It was recommended that HMRC launch a communications campaign to increase parental awareness and understanding of the scheme, as this is likely to have a positive impact on take-up. Childcare providers should also be supported with further information on the scheme, both for themselves and to hand out to parents.

There was also criticism of the information available on the gov.uk website. The report stated: ‘Parents reported that they found the gov.uk website hard to navigate or that the information was confusing or unclear. Some parents who had visited the website talked through the difficulties they encountered locating key information, such as eligibility to make an application, which appeared to involve navigating through a number of links or pages.’