Tax-Free Childcare is a government scheme that tops up your childcare payments by 20%, up to a maximum of £2,000 per child per year (or £4,000 for disabled children). For every £8 you pay in, the government adds £2. It is available to working parents of children aged 0–11 (or 0–16 if disabled).
How It Works
- You open an online Tax-Free Childcare account on GOV.UK for each child
- You pay money into the account
- The government adds 25p for every £1 you deposit (equivalent to a 20% top-up)
- You use the account to pay your childcare provider directly
The maximum government contribution is £500 per quarter (£2,000 per year) per child. To receive the full amount, you need to deposit £8,000 per year — meaning total childcare spending of £10,000 from the account.
Eligibility
Both parents (or the sole parent in a single-parent household) must meet all of these criteria:
- Working: Each parent must expect to earn at least the equivalent of 16 hours per week at the National Living Wage over the next 3 months — £2,643.68 if you are 21 or over (around £10,575 per year, using the 2026-27 NLW rate of £12.71/hour; lower figures apply to 18-20s, under-18s and apprentices, and there is no minimum in the first 12 months of a new business)
- Not earning too much: Neither parent may have expected adjusted net income over £100,000 for the year
- Not receiving certain benefits: You cannot get Tax-Free Childcare at the same time as Universal Credit or childcare vouchers (if you claim Universal Credit instead, see how earnings reduce your award under the 2026 Universal Credit earnings taper)
The child must be 11 or younger (16 or younger if disabled) — eligibility lasts until the September after their 11th (or 16th) birthday — and you cannot claim for a child you foster.
What Counts as Qualifying Childcare?
The scheme covers childcare from registered providers that have signed up to Tax-Free Childcare, including:
- Nurseries and preschools
- Childminders
- After-school clubs and holiday clubs
- Play schemes
- Home care workers registered with a home care agency
It does not cover payments to relatives (e.g., grandparents) unless they are registered childminders.
Tax-Free Childcare vs Childcare Vouchers
Employer-supported childcare vouchers are only open to people who joined on or before 4 October 2018, and GOV.UK says they can keep getting them as long as they meet the scheme conditions. You cannot continue to claim vouchers if you successfully apply for Tax-Free Childcare. Key differences:
| Feature | Tax-Free Childcare | Childcare Vouchers |
|---|---|---|
| Who can join | All eligible parents | Closed to new entrants |
| Maximum benefit | £2,000/child/year | Depends on your tax band and your employer’s scheme |
| Employer involvement | None required | Must be offered by employer |
| Self-employed eligible | Yes | No |
For most families, Tax-Free Childcare provides a larger benefit, especially if you pay Higher Rate tax or are self-employed.
Combining with 30 Hours Free Childcare
In England, working parents of children from 9 months to 4 years old may be eligible for 30 hours of free childcare per week for 38 weeks of the year. You can use Tax-Free Childcare alongside the 30 hours offer to cover additional hours, meals, or other charges not included in the free entitlement. You apply for both through the same GOV.UK Childcare Service account.
From September 2025, eligible working parents in England can access this from when their child turns 9 months old.
Reconfirming Eligibility
You must reconfirm your eligibility every 3 months through your online account. If you forget, the government contributions stop. Set a reminder to reconfirm before each quarterly deadline.
Key Takeaway
Tax-Free Childcare is worth up to £2,000 per child per year and is straightforward to set up. If you are a working parent paying for registered childcare, check your eligibility and open an account — the application takes around 20 minutes and the savings start immediately.