Tax-free Childcare topped up working families' spending on childcare by £241 million across UK last year, with thousands more signing up to the scheme.
In Fife HMRC data shows 1,065 parents used the scheme to help with the cost of childcare in 2020-21, up from 930 the previous year.
Families get £2 for every £8 they put into an account set up for childcare spending – up to £2,000 per child per year, or £4,000 for a child with a disability.
It is available for children who are aged 11 and under, or 16 and under if they have a disability.
Yet while more families in Fife are benefitting from the subsidy, a comparison with population estimates suggests many are not.
The used accounts were for 655 children in 2020-21, but the latest population estimates from the Office for National Statistics show there are 20,962 children aged 11 or under in the area.
However, not all children qualify for tax-free childcare.
Applying parents must be in work and earning at least the equivalent of the national minimum wage for 16 hours per week – currently £142.56 for those aged 23 or over, but less for younger workers.
They are also ineligible if they claim Universal Credit, tax credits, or certain other benefits, or if one of them earns more than £100,000 a year.