Why tax-free childcare account website makes me want to bawl
What do you get when you take one frazzled parent and sit them in front of an officious government website? Answer: confusion. Add technical glitches to the mix and that bewilderment quickly turns to anger and frustration.
I have been promising myself (and my husband) that I will sign up to the government’s new tax-free childcare accounts ever since I wrote about them in my Family Money column. The scheme went live at the beginning of May and is essentially a savings account: parents open an online account that is then topped up by the government and used to pay for registered childcare.
Additionally, from September this year parents of three- and four-year-old children in England will be able to apply for 30 hours of free childcare worth about £5,000 a year per child.
The good news is that I am fortunate enough to be eligible for both these schemes. There are obvious financial incentives to opening a tax-free childcare account — for every £8 paid in, the government adds £2 (up to a maximum of £2,000 a year per child). But the bad news is they really make you work for it.
Like any parent, I have better things to do than spend my spare time trying to get my head around childcare cost options (these include working, sleeping and eating in the few hours before my children wake up again).
But HMRC claims that parents can apply for both the tax-free childcare account and the 30 hours offer in one go (and could benefit from both at the same time) through the government’s new digital childcare service. So I took the plunge.
If you are thinking of doing the same — read this first.
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No matter what time of day or night I tried to sign up, things kept going wrong. Once I had found the correct web page [childcare.tax.service.gov.uk] I had multiple problems logging on.
First, I had to set up a username and password. Then HMRC set me up with a government gateway user ID (via my mobile phone and email). This is a 12-digit number which you will need every time I log in.
Once in, I found I didn’t have the right information to hand to complete my claim (you will need both parents’ national insurance numbers, payslips and/or your passport details — plus details of parental employment). If you go away to look for any of these, guess what happens? The website logs you out.
The last straw was the failure of the website. Even when I had the documents to hand, it repeatedly kicked me out, citing “technical difficulties” and directed me to the government helpline instead.
Screaming and white wine could not cure my child tax rage — so I took to social media to vent. While my experience had been frustrating, at least it was not as financially challenging as that of some of my friends.
I discovered dozens of parents who have struggled with the website. Many had signed up only to find they had no access to their accounts. One said she had been unable to log into her account for days, leaving her unable to pay her children’s nursery fees. She had to find money from elsewhere to avoid being hit with late payment fines.
Other problems included logins that failed to work, despite successful applications for usernames and passwords, applicants being told they had applied for 30 hours free instead of the tax-free childcare account, and delays receiving government top-ups.
One mum on a Facebook group I belong to called the process “painful” and the system “a joke”, while another said it was deeply confusing. And because the new childcare scheme has been launched as a digital service, you will need a computer to sign up — you cannot do so via post or over the phone.
HMRC said it was aware of the issues — and apologised — but stressed that thousands of customers are signing up successfully every week. It added that parents and providers experiencing problems can call the childcare service helpline on 0300 123 4097 (although some parents are reporting issues on this line too).
If one of its aims is to encourage parents to stay in work, the new system appears to fall woefully short
Although I was frustrated by the process, I don’t wish to appear ungrateful for the contribution. The average cost of a full-time nursery place is now more than £11,000 a year for a child under two, according to the Family and Childcare Trust.
The amount English families spent on childcare is more than double the average they spend on food and drink. And if you live in inner London, the average cost of a full-time nursery place jumps to over £15,000. It is enough to make you bawl.
The fact that childcare is a significant chunk of our family budget — about one-third more than our mortgage payments — means I have looked very carefully at the different government subsidies. Will the old system or the new system be better for our budget? Millions of parents now face this either/or choice.
I currently get childcare vouchers (a form of salary sacrifice which I claim through my employer), but because my husband is self-employed he does not qualify for these. I am almost certain we would be better off with the new tax-free childcare account, but I am nervous about cancelling my vouchers before I have tested the new system. Equally, I don’t want to pay for vouchers I can’t use.
HMRC has launched an information website called Childcare Choices, which is designed to make it easier for parents to find out what support they are eligible for and to compare their options. This is very helpful as a starting point, but leaves a lot of questions unanswered.
Listen to Family Money columnist Lucy Warwick-Ching reveal why HMRC’s new tax-free childcare accounts are causing parents to have tantrums
Let’s start with those extra free hours for children aged three to four. Currently, qualifying parents are entitled to 15 free hours, but from September this year the allowance will be increased to 30 hours. Not everyone is eligible for the increase. Both parents must earn at least £120 a week, but neither can have an annual income of £100,000 or more. But even if you meet these criteria, not all childcare providers will offer it as they say they cannot afford to, blaming the government’s funding formula.
Our son’s nursery has said it is still doing the sums, but I am not holding out much hope. Even if we were able to find another nursery in central London that was able to offer the full 30 hours, this would mean taking him away from a place where he is happy and settled, and is convenient for both of our jobs.
For all of these reasons, Rachel Carrell, founder of Koru Kids, a childcare provider, says the parents she talks to do not understand their options, and find it difficult to access help.
As for me, I finally managed to sign up to the tax-free childcare account. Can I sit back and relax now? No chance. HMRC says I must “manage” my childcare service account, reconfirming my eligibility (by filling in a form) every three months.
If one of its aims is to encourage parents to stay in work, the new system appears to fall woefully short. Without rapid improvement, it risks becoming another chapter of disappointment in the saga of digital government.