Transparency data

Minutes of the meeting held on 25 June 2025 

Updated 6 August 2025

Chair:

Dr Stephen Brien

Members:

Les Allamby
Bruce Calderwood
Rachel Chiu
Carl Emmerson
Daphne Hall
Philip Jones
Jacob Meagher
Dr Suzy Walton

1. and 2. Private Sessions

[Reserved items] 

3. The Childcare Payments (Eligibility) (Amendment and Transitional Provisions) Regulations 2025 

3.1 The Chair welcomed the following officials to the meeting, Helen Early (HMRC), Susan Hartridge (HMRC), Nyree Lane-Watkins (Legal, HMRC), David Parker (HMRC), Shamilah Khan (Legal, HMRC)

3.2 In her introduction, Helen Early explained that Tax-Free Childcare (TFC) provides financial support to eligible working parents, aiming to support those parents who wish to return to work, extend their current working hours or simply pay towards childcare. At present when a parent starts a new job or is taking unpaid leave, they are unable to apply for Tax-Free Childcare until 31 days before commencing their new job or return to work. This rule was replicated in Department for Education’s (DfE’s) Free Childcare for Working Parents scheme.

3.3 In 2024, to improve this service and ensure parents have more flexibility in selecting a childcare provider, DfE increased the application window enabling parents to apply for Free Childcare for Working Parents from the beginning of the previous academic term, if their new job, or return to work is before the end of the first month of the following term. DfE have also widened the scope of the scheme from three to four-year-olds to now include nine-month-old to two years of age, the final stage of this expansion coming into effect from September 2025. 

3.4 There is a side effect currently impacting the digital service.  Currently only one application window can be applied, so any applications for the DfE Free Childcare scheme made during the new extended window are being processed manually. Now with both windows replicated it will allow all applications to be done digitally. The customer journey is unaffected by the proposed changes and there will be no change to internal systems. The financial impact considered is five million pounds. Overall, this is a positive change for customers. 

3.5 Committee members raised the following main questions in discussion: 

(a) How did it become that the two schemes fell out of alignment? Who has overall decisions for childcare support, is there a lead department for the process?

DfE were changing regulations to better support users of their scheme by giving them more flexibility, they contacted HM Treasury (HMT) who agreed that TFC would align, and HM Revenue and Customs (HMRC) are now following through on this decision, it was a conscious decision to un align the schemes. Please note this decision was taken under the previous government.

(b) Are there any constraints on when the changes can be made?  
 
HMRC have had to carry out due diligence on the change, DfE would have liked this in place when they launched their expansion, to counter any customer issues. It was an acceptable risk to not align immediately whilst HMRC waited to hear from HMT regarding alignment. Now is the time these commitments can be fulfilled.

(c) How does the process work from an applicant’s perspective?  

An applicant would access the childcare service via the portal. There is no ability to select which scheme they wish to apply for; they answer a series of questions which determines eligibility to both schemes. The journey should be seamless.

(d) It would be desirable to ensure that everything works in unity, what is the communications strategy to ensure people are aware of the change?

The online guidance will be updated alongside childcare choices and the gov.uk websites. The applications screen will also show the new time frame. The communications strategy has not been finalised but the Department is happy to share with the Committee once finalised.

(e) In the Explanatory Memorandum the wording regarding periods for application differ from the regulations. Can this be clarified?
 
Whilst both schemes relate to childcare, they are both very different in terms of delivery. One is essentially a savings scheme which the government top up, up to £2,000 in a ‘childcare account’ which the parents then use to pay a childcare provider and the other is to secure a childcare placement. The language used relates to DfE legislation, which is why there is mention of academic terms, but academic term does not matter in the case of TFC. HMRC are trying to keep things simples but there is a slight difference between DfE legislation and ours in the Explanatory Memorandum, hence why it may look confusing, hopefully the Explanatory Memorandum is not giving the impression that it is doing something different to what the legislation is. The wording can be considered again and the Department can update the Committee in due course.^{[footnote 1]}

(f) Many people are making applications for both schemes. The mention of academic terms is confusing for parents who have children who have yet to reach school. Nurseries do not have terms – this is language more common in schools. Secondly the user journey through the system could also sometimes lead to confusion. A user could land on the Childcare Choices page, and then is directed to the government gateway, at which point they have to create an account. It is known that this is a lengthy and sometimes difficult process. Then there is the issue of having to reconfirm their eligibility to the benefit every three months and again using a system that is quite unwieldy. Is there an opportunity to look at this?

The point regarding the use of academic term is appreciated. It has been used as a catch all time frame. This is not stipulated in the regulations. As mentioned, the language comes from DfE, this is new for HMRC, but as agreed this can be reviewed again. In terms of revamping or making the journey clearer, it is worth stressing that this only a small change, so whilst valid, it would not be the correct time to address this. It is worth noting that there is a larger piece of work looking at the customer journey, which will hopefully cover the concerns mentioned.

(g) Is the Northern Ireland (NI) tax for childcare scheme covered by this?
 
Yes, NI is covered, correct.

(h) In NI, a lot of people work across the borders. If a person works in the UK, but uses childcare in Ireland, this should be legally protected under the Windsor framework, but can this be taken away under this introduction?
 
In short no, it has always been set up to work this way and it does not need to be protected by the Windsor framework; if a person is working in the UK but they travel back home to Paris, where the childcare is provided, as long as all the criteria is met by the childcare provider there is no reason why this could not be used and receive the payments for it. ^{[footnote 2]}

(i) It makes sense to simplify the schemes but are there protections to stop people unwillingly claiming the wrong schemes. For example, there was a recent upper tribunal case in which the person had claimed TFC, but this then wiped out their Tax Credits, which they lost on appeal. What is in place to stop someone mistakenly claiming TFC and then wiping out their Universal Credit.

In the process of realigning if a customer is asked what benefits they currently claim the system will identify answers and what benefits they are entitled too. Tax Credit system did not have this built in and gave the customer the option, this does not happen on Universal Credit and the system will simply remove any benefits not entitled too.

(j) It would be worth noting that both parents do not have to be working to receive TFC, this could be more prominent on the website.
 
That is fair, and something that can be considered.

(k) In the past people only had 31-day window to apply, which now has been extended. Are some people likely to feel that the past provision was not fair and more help could have been provided to help secure a childcare provider?
 
Regarding TFC no one will have missed out as under the existing policy they were only entitled to apply within 31 days of returning to work. TFC is often used to top up the 30 free hours provided by DfE. When DfE expanded their offer to nine-month-old what they want to do is allow parents coming back   from maternity leave to plan better. Technically some people could say they would have like to have this extended provision earlier, but in practice this is not the case as the extended period was only applicable once the relevant regulations were implemented by DfE in April 2024. Before this, 31 days would have been the correct, and only, application window for this scheme. A line has to be drawn somewhere; the new offer is there to improve the service for customers. The policy at the time was correct, whether someone feels aggrieved by the expanded offer or not. Specific questions regarding the Free Childcare for Working Parents scheme policy and decisions would likely need to be addressed to DfE who the scheme owners are.

(l) Are there any plans in place to look at childcare providers and their behaviour; such as asking for large non-refundable deposits prior to the applicant receiving funding from the schemes? This may be putting parents in hardship or face losing their childcare space.  
 
There will be monitoring of the impacts going forward. It is difficult to say what childcare providers will or will not do. It is giving parents the best start and more flexibility.

(m) Who owns this policy and the consequences? Perhaps it should be DfE, it would be good to know the process has been fully thought through.

It is a collective initiative between the departments, any changes made by one are considered by the other and vice versa.

3.6 The Chair thanked officials for attending.  Following a private discussion of the Committee after the meeting, it was agreed that the Committee was content for them to proceed.

4. Private Session

[Reserved item]

5. Next Meeting

5.1 The next meeting is scheduled to take place on 16 July.

Annex A: Attendees 

Guests and Officials

Item 3:

Helen Early (HMRC)
Susan Hartridge (HMRC)
Nyree Lane-Watkins (Legal, HMRC)
David Parker (HMRC)
Shamilah Khan (Legal, HMRC)

Secretariat:

Denise Whitehead (Committee Secretary) 
Kenneth Ashworth (Assistant Secretary)
Robert Cooper (Assistant Secretary)
Edward Munn (Assistant Secretary)
Lauren Shields (Researcher) 

1. The Department has published a further Explanatory Memorandum: The Childcare Payments (Eligibility) (Amendment and Transitional Provisions) Regulations 2025 - Explanatory Memorandum ↩

2.  Further information provided after the meeting: Nothing in this Statutory Instrument changes the way that eligibility for childcare payments operates in relation to Northern Ireland. The position is that where a person lives in Northern Ireland and works and uses childcare in Ireland, the person will not be able to apply under the scheme because they do not work in the UK. However, where a person has a partner who works in Northern Ireland and they are the lead applicant for the childcare payments, and all other eligibility criteria are met, they will be able to receive them. There are some other limited circumstances where a person who is working outside of the UK is deemed to be in the UK.
   
   It continues to be possible to use childcare payments to pay for qualifying childcare providers in Ireland. The Childcare Payments Act 2014 covers the UK. But, at section 2(4) it provides vires to make regulations to allow persons to use qualifying childcare that is outside of the UK, including Ireland. The Childcare Payments Regulations 2015 at regulation 3(6) provides for this. Regulation 3(6) was amended in 2019 by The Tax Credits, Child Benefit and Childcare Payments (Miscellaneous Amendments) Regulations 2019 regulation 12(2)(a) to take account of the working tax credits case of NB v HMRC (TC) [2016] NICom 47 and to ensure that childcare providers in Ireland could continue to be considered as qualifying childcare, provided they meet the required standards. This most recent amending instrument does not affect regulation 3(6) of the Childcare Payments Regulations 2015 and persons who work in Northern Ireland can continue to use approved childcare providers in Ireland. ↩