WORKING parents in Scotland could be missing out on government childcare incentives offering combined potential savings of thousands of pounds a year.

The tax-free childcare scheme was introduced across the UK in April 2017 and could save parents up to £2,000 a year. But more than half (53 per cent) of Scottish parents are unaware of the scheme, according to The Real Cost of Childcare Report by Killik & Co, an investment company.

Parents of three and four-year-olds are also entitled to up to 16 hours a week of free childcare. But only 35 per cent of Scottish parents in the survey claim their allowance, potentially missing out on savings of about £3,405.

Svenja Keller, head of wealth planning at Killik & Co, said: “Our survey shows that Scottish parents could make savings of more than £5,000 a year on childcare by using government help. They could then use the savings to help plan for the financial future. Start small, start early and seek advice - this is a mantra all parents should keep in mind.”

The potential savings would be welcome as many Scottish families are already struggling to meet the cost of childcare, which rose by 4.5 per cent last year, according to the Family and Childcare Trust. Scottish parents pay on average £111 a week for a part-time (25 hours) nursery place for a child under two, or £5,800 a year. The cost is slightly lower for a two-year-old at £106 a week.

The high cost is even said to be affecting parents’ decision on whether to have more children: 42 per cent of Scottish parents are reluctant to add to their family because childcare is so expensive, according to the Killik & Co survey.

Keller said: “We are now living in an economic environment where the cost of childcare is influencing parents’ decisions on whether or not to have more children.”

It is perhaps no surprise that Scottish parents rely heavily on family members to help care for children – 62 per cent in the survey and the highest of any area of the UK. Of those, 90 per cent depend on grandparents.

Ellen Broomé, chief executive at the Family and Childcare Trust, said: “Even when parents do find available childcare, high childcare costs too often freeze them out of the workplace. Our research at Family and Childcare Trust found that parents earning minimum wage gain less than £2 an hour for each extra hour they work after paying for childcare – and some get even less than this. We must make sure every parent is better off working after childcare costs.”

Parents of children aged 11 and under can get up to £2,000 a year for each child under the Tax-Free Childcare scheme, as long as they are in work and earning at least the minimum wage for 16 hours a week, up to a maximum of £100,000 a year.

The Government pays £2 for every £8 you pay to your childcare provider through an online account. You can only use approved childcare providers, such as a nursery or registered childminder, and the provider must be signed up to the scheme. You can open an online account at the Government website

You cannot sign up to the tax-free childcare scheme if you already claim working tax credit, child tax credit, universal credit or childcare vouchers. The best scheme for you depends on your circumstances, though childcare vouchers are being phased out and will close to new applicants on April 6.

“Many parents could benefit by switching from childcare vouchers to the tax-free Childcare scheme, in particular if they have high childcare costs or several children,” said Keller.

“The new scheme is also beneficial to the self-employed, who are currently denied access to childcare vouchers, as they are only offered through employers.”

The childcare calculator on the Government website can help you work out which scheme offers the most support.

If your child is three or four years old, you can get up to 600 hours of free childcare a year, which works out at about 16 hours a week during term time, in a council nursery, or in a nursery or playgroup that has a partnership contract with the local authority. Families on lower incomes might also be eligible for free childcare for children between the ages of two and three.

The Scottish Government is committed to increasing the free early learning and childcare provision from 60 to 1,140 hours (30 hours a week) from 2020 and trials are already underway in several regions.

However, only 35 per cent of Scottish parents in the survey use their free childcare hours. The low take-up rate is partly explained by the reliance on family and friends, but 18 per cent of respondents do not claim the chance of free childcare because they think the application process is too complicated.

Broomé said: “Childcare is as vital as the rails and roads to making our country run: it boosts children’s outcomes, supports parents to work and provides our economy with a reliable workforce. Too many parents, however, are being held back by the maze-like complexity of the current childcare system and missing out on opportunities to work and boost their children’s learning.”