The total your provider charges each month
Children under 11 (or under 16 if disabled)
Ready to start saving? Set up your Tax-Free Childcare account on GOV.UK - it takes around 20 minutes.
Set Up Tax-Free Childcare on GOV.UKFigures are estimates based on current Tax-Free Childcare rules. Always verify your entitlement at GOV.UK.
Ready to set this up? Create your Tax-Free Childcare account on GOV.UK and start paying in today.
Set Up Tax-Free Childcare on GOV.UKFigures are estimates based on current Tax-Free Childcare rules. Always verify your entitlement at GOV.UK.
Learning and Development Picks for Little Ones
Are You Eligible for Tax-Free Childcare?
Tax-Free Childcare is available to most working parents but there are several eligibility criteria. Understanding whether you qualify is the first step to claiming money you are entitled to.
How Tax-Free Childcare Actually Works
Tax-Free Childcare is a government scheme that effectively gives you money towards your childcare costs. For every 80p you pay into a dedicated online account, the government adds 20p. This means the government is covering 20% of your childcare costs, up to a set annual maximum.
The Top-Up Explained Simply
Think of your Tax-Free Childcare account like a prepaid card specifically for childcare. You transfer money in, the government automatically adds their 20% top-up, and you use the total balance to pay your childcare provider. Your provider must be registered with the scheme to accept payments this way.
The Annual Caps
The government top-up is generous but it is capped per child per year:
- Standard children: Maximum government top-up of £500 per quarter, or £2,000 per year per child
- Disabled children: Maximum government top-up of £1,000 per quarter, or £4,000 per year per child
To reach the maximum top-up for a standard child, you would need to pay in £2,000 per quarter (£8,000 per year) yourself. If your childcare costs are lower than this, your top-up is calculated proportionally.
Worked Examples
Example 1 - One child, £600/month in childcare
Example 2 - Two children, £1,400/month in childcare
Which Childcare Providers Are Accepted?
Your childcare provider must be registered with Tax-Free Childcare to accept payments. Most registered providers include:
- Registered nurseries and childminders
- Registered after-school clubs and holiday camps
- Approved home care agencies
- Some nannies (if registered as a childminder)
You can check whether your provider is registered on GOV.UK before setting up your account. If they are not yet registered, you can encourage them to sign up - the process is straightforward for providers.
How to Set Up Your Account
- Apply on GOV.UK through the Childcare Service - you will need your Government Gateway login
- Confirm your eligibility by answering questions about your income and employment
- Set up a direct debit or bank transfer to pay money into your account
- The government adds the top-up automatically within 24 hours of each payment
- Pay your provider directly from your Tax-Free Childcare account using their unique code
The whole process takes around 20 minutes to apply and most applications are approved instantly. Reconfirmation is required every three months to continue receiving the top-up.
Tax-Free Childcare vs Other Childcare Support
Tax-Free Childcare is not the only form of government childcare support available in the UK. Understanding how the different schemes work together helps you maximise what you receive.
Tax-Free Childcare vs Childcare Vouchers
The older Childcare Voucher scheme closed to new applicants in October 2018, but parents who were already enrolled before that date can continue to use it. You cannot receive both Tax-Free Childcare and Childcare Vouchers at the same time. You must choose one scheme.
| Feature | Tax-Free Childcare | Childcare Vouchers |
|---|---|---|
| Open to new applicants | Yes | No (closed 2018) |
| Self-employed eligible | Yes | No |
| Maximum annual benefit | £2,000 per child | £933 per parent |
| Works with Universal Credit | No | No |
| Both parents must work | Yes | No |
For most families, Tax-Free Childcare offers a higher maximum benefit, particularly with multiple children or higher childcare costs. However, if you are still on the old voucher scheme and your employer offers a good voucher benefit, it may be worth comparing before switching.
Free Childcare Hours
Free childcare hours and Tax-Free Childcare are two separate schemes and you can use them at the same time. The free hours reduce the total childcare cost you need to pay, and Tax-Free Childcare then tops up the remaining amount you do pay. Using both together is the most effective way to reduce your childcare costs.
- 15 hours free per week - available for all children aged 3 to 4 years old
- 30 hours free per week - available for working parents of 3 to 4 year olds who meet the same eligibility criteria as Tax-Free Childcare
- 15 hours for 2 year olds - available for eligible families (means-tested)
- 15 hours from 9 months old - being rolled out for working parents, check current GOV.UK guidance for the latest eligibility
Universal Credit Childcare
If you receive Universal Credit, you cannot use Tax-Free Childcare at the same time. However, Universal Credit includes a childcare element that can cover up to 85% of childcare costs for eligible families, which is a higher percentage than Tax-Free Childcare. If you are on Universal Credit, the childcare element within that scheme is almost certainly the better option.
Nursery and School Essentials
Common Mistakes and Misunderstandings
Tax-Free Childcare is one of the most underused government benefits in the UK. Research consistently shows that a large proportion of eligible families are not claiming. Understanding the common misconceptions that stop people applying helps make sure you are not leaving money on the table.
Myth 1: Self-Employed Parents Are Not Eligible
This is probably the most widespread misunderstanding about Tax-Free Childcare. Self-employed parents are fully eligible, provided they meet the minimum earnings requirement. The scheme was specifically designed to include the self-employed, who were excluded from the older childcare voucher scheme. Freelancers, contractors, sole traders, and company directors who pay themselves a salary are all potentially eligible.
Myth 2: You Cannot Use It During Parental Leave
You can continue to use Tax-Free Childcare while you are on maternity, paternity, shared parental, or adoption leave. The three-month reconfirmation periods during leave are treated as satisfying the minimum earnings requirement. You do not need to pause your account during parental leave.
Myth 3: It Only Covers Nursery Costs
Tax-Free Childcare covers a wide range of registered childcare, not just nurseries. Registered childminders, after-school clubs, holiday camps, breakfast clubs, and approved home care agencies can all be paid through the scheme. As long as the provider is registered with the scheme, you can use your Tax-Free Childcare account to pay them.
Myth 4: The Application Is Complicated
Many parents put off applying because they assume the process is bureaucratic and time-consuming. In practice, most applications are completed in around 20 minutes through the GOV.UK Childcare Service and most are approved instantly. You need your Government Gateway details, your National Insurance number, and your employer details if employed.
Myth 5: It Is Not Worth It for Part-Time Childcare
Even if your childcare costs are relatively modest, the saving is proportional. If you spend £200 per month on childcare, the government still contributes £50 per month, which adds up to £600 per year. Over several years of childcare, that is a meaningful amount of money.
What Happens If Your Circumstances Change?
You must reconfirm your eligibility every three months through GOV.UK. If your circumstances change - for example, if one parent stops working, your income changes significantly, or your child turns 11 - you should update your account promptly. If you receive a top-up when you are not eligible, you may be required to repay it.
