Raising a family in the UK can be expensive, but there’s good news, HMRC offers a range of tax breaks and financial support to help young families manage their costs. Whether you’re covering childcare expenses, saving for your child’s future, or simply looking for ways to keep more of your earnings, understanding these tax reliefs can make a significant difference to your household budget.
Here’s how you can take advantage of the tax breaks available in 2025.
Child Benefit is a financial lifeline for many families. As of 2025, you can receive:
This benefit is available to all parents, but if you or your partner earn over £50,000, you may have to pay back some or all of it through the High Income Child Benefit Charge (HICBC). If you’re close to this threshold, consider options like increasing pension contributions to reduce your taxable income and keep more of your Child Benefit.
If you have children under 11 (or under 17 for disabled children), you could be eligible for Tax-Free Childcare, which helps cover the cost of registered childcare, including nurseries, childminders, after-school clubs, and holiday camps.
This scheme can significantly reduce your childcare costs, allowing you to keep more of your earnings.
If one partner in a marriage or civil partnership earns below the Personal Allowance threshold (£12,570) and the other earns under £50,270, you can transfer £1,260 of your personal allowance to your spouse. This can reduce their tax bill by up to £252 per year.
It’s free to apply and can be backdated up to four years, meaning you could receive a lump sum if you haven’t claimed before.
For lower-income families, Universal Credit offers additional financial support. If you’re working but on a low income, you may qualify for help with:
Universal Credit is income-dependent, so it’s worth checking your eligibility through HMRC’s online calculator.
While the Childcare Vouchers scheme closed to new applicants in 2018, if you’re still enrolled, you can continue using it. It allows parents to pay for childcare through salary sacrifice, meaning you save on Income Tax and National Insurance. If you’re eligible, it’s worth continuing to benefit from this scheme instead of switching to Tax-Free Childcare.
If you’re not working because you’re raising children, you may be eligible for National Insurance (NI) credits through Child Benefit claims. These NI credits contribute towards your State Pension eligibility, ensuring you don’t miss out on future retirement income while taking time off to care for your child.
If you or your partner work from home, you may be able to claim tax relief on household expenses related to work. This includes:
This can be a useful way to reduce taxable income while working flexibly around family commitments.
For families on Universal Credit or Working Tax Credit, the Help to Save scheme offers a 50% bonus on savings of up to £2,400 over four years. That’s an extra £1,200 from the government to help with financial stability.
If you’re investing for your child’s future through a stocks and shares ISA or other investments, make sure you utilise the £6,000 CGT allowance before selling assets to avoid unnecessary tax payments. Spouses can also transfer assets tax-free to spread out gains.
Raising a family in the UK comes with financial pressures, but HMRC’s tax breaks provide valuable support for young families. Whether it’s reducing childcare costs, lowering your tax bill, or boosting savings, making use of these schemes can free up more money for the things that matter most.
Take the time to explore your eligibility and claim what you’re entitled to—it could make a significant difference to your family’s financial well-being in 2025 and beyond.
Need more personalised advice? Visit HMRC’s website or speak to a financial advisor to ensure you’re getting the maximum benefits available.
A heartfelt thank you to Satinder for contributing this blog! 🤗
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