Analysis of Tax-Free Childcare using RTI and self-assessment data
This analysis examined how Tax-Free Childcare supports labour market participation for mothers from pregnancy to childbirth and following maternity leave.
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This HMRC analysis sought to understand how Tax-Free Childcare (TFC) supports labour market participation for mothers following childbirth and maternity leave. A series of linked analytical datasets were created by combining TFC records with Child Benefit, PAYE Real Time Information (RTI), and Self-Assessment (SA) data.
Three cohorts of mothers, from 2015, 2018 and 2022, were identified using Child Benefit records. PAYE RTI and SA data for these cohorts were used to measure labour market engagement before and after the rollout of TFC as take-up increased.
The analysis found that mothers using TFC are more likely than non-users to return to work following childbirth and return to working hours from before pregnancy. However, it cannot be inferred that TFC was the cause of this higher labour market engagement.
The analysis was part of HM Treasury’s Labour Market Evaluation and Pilots (LMEP) Fund announced at Spring Budget 2023.