The government paid out £240m in top-up payments to families using the scheme over tax year 2021-22.
But despite the rise in claimants from 374,135 in the previous year, there are still an estimated 800,000 families that are not using the childcare subsidies.
The scheme offers a 20% government funded top-up on money deposited into tax-free childcare accounts, which can be used to pay childcare providers. Accounts can be opened at any time of the year and can be used straight away, and money can be deposited at any time and used when needed.
For every £8 paid into a tax-free childcare online account, families will automatically receive an additional £2 in government top-up, and it is available for children aged up to 11, or 17 if the child has a disability.
Families receive up to £500 every three months, per child, or £1,000 if their child is disabled, helping towards the cost of before and after-school clubs, childminders and nurseries, holiday clubs and other approved childcare schemes.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘Tax-free childcare can make a big difference to families, helping with the bills for things like nurseries, childminders and after school clubs. It’s easy to register – search ‘Tax-Free Childcare’ on gov.uk.’
The scheme is open to families earning at least the National Minimum Wage or Living Wage for 16 hours a week, on average, with an earnings cap of £100,000 per annum. It is not available for those receiving tax credits, Universal Credit or childcare vouchers.