Many parents don’t realise they can get up to £2,000 a year for each child to help with the cost of childcare – totally separate from the government’s 30-hour scheme that was expanded this month.

Register for Tax-Free Childcare and you’ll get an account you can use to pay for care for children aged up to 11.

For every £8 working parents pay into the gov.uk childcare account, the government automatically tops it up by £2, up to £2,000.

Some 1.3 million families are eligible, but around 800,000 aren’t taking advantage of this benefit.

“There’s still a huge awareness gap,” says Chloe Phillips, financial planner at The Money Makeover.

“I’m always surprised by how many parents I speak to think the scheme ends once nursery is over.”

To take part, you simply transfer 80% of the required amount into your Gov.uk childcare account, where it is automatically topped up with the remaining 20%. 

This account is then used to pay for your childcare. Lots of childcare venues link up their own apps to the account to automate monthly payments.

Some 75,000 childcare settings accept Tax-Free Childcare as payment, including nurseries, childminders, and clubs.

Am I eligible?

Children stop being eligible on 1 September after their 11th birthday, unless they have a disability, in which case their parents receive up to £4,000 a year until 1 September after their 16th birthday.

Parent/s must earn at least the minimum wage for 16 hours a week on average.

Those receiving universal credit or childcare vouchers  are not eligible, and neither are households in which a parent earns more than £100,000.

That’s not your total household income – if each parent earns £99,000, they’re still eligible.

“I see far too many parents miss out on tax-free childcare, not because they’re ineligible, but because they don’t realise how ‘adjusted net income’ works,” says Philly Ponniah, chartered wealth manager at Philly Financial.

Adjusted net income refers to an earner’s total taxable income before their personal allowance is deducted.

This figure includes things like money, shares and dividends, but does not include pension contributions.

More factors affecting your adjusted net income can be found on the government website.

What if you’re on maternity/paternity/shared parental leave?

If you’re on maternity or statutory family leave you can claim for older children – but not the child you’re off work to care for.

Eligibility for the latter is limited to the last 31 days of leave.

What if you decide not to use the money for childcare?

If you withdraw funds, the government will take back its £2 top up for every £8 withdrawn.