Parents are being encouraged to check if they qualify for a huge annual financial boost for childcare. Around 800,000 British parents are thought to be missing out on a tax-free childcare scheme.

Data shows that despite more than 1.3 million people being eligible for the aid, only 500,000 are currently claiming it. And it’s relatively easy to find out if you qualify online.

The scheme offers eligible parents up to £500 every three months – a total of £2,000 a year – per child to help cover costs such as nurseries and after-school clubs, as well as holiday clubs. To qualify, you and your partner (if you live together) must work at least 16 hours a week, on the minimum wage – meaning you both need to earn at least £2,379 every three months.

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Self-employed people or those on irregular incomes may still be eligible if they earn at least £9,518 in total during the year. Families can claim for each child until 1 September after their 11th birthday (or 16th birthday if they are disabled).

However, people who receive Universal Credit or tax credit cannot use the scheme and risk losing their benefits if they sign up. Instead, they can apply separately for help with childcare costs through Universal Credit.

For more advice, visit gov.uk/childcare-calculator. The scheme is designed to allow parents to avoid paying tax on income they then use to pay for childcare.

Simply put, for every £100 you earn, you pay £20 in tax to the government.