Tax-Free Childcare allows parents to open an online bank account, and use this to pay registered childcare providers directly. For every £8 parents pay into their account, the government adds
This scheme is open to all qualifying parents. This includes those who are self-employed. Also, those who have been unable to access childcare vouchers because their employer doesn't have a scheme.
In total parents can use their Tax-Free Childcare account to pay for up to £10,000 of childcare, per child, each year. This means you get up to an extra £2,000, per child, from the Government each year. If your child is disabled, you could get up to £4,000 extra each year.
The money can then be used to pay for day nurseries, pre-schools, registered childminders and school based care such as breakfast, after-school and holiday clubs.
Tax-Free Childcare is currently available to parents with children under the age of 12, or 17 if the child is disabled.
You are eligible if:
- Your child is under 12 and usually lives with you
If you (and your partner, if you have one):
- are 16 or over
- live or work in the UK
- are employed or self-employed
- are over 21 and earn on average at least £120 a week, unless in your first year of self-employment. Different rates apply if you're under 21 or an apprentice
- earn less than £100,000 a year each
- don't get other support with your childcare, including from a childcare voucher or salary sacrifice scheme
You may also be eligible if you have a partner and one of you gets any of the following benefits:
- Carers Allowance
- Employment and Support Allowance
- Incapacity Benefit
- Severe Disablement Benefit
You can sign-up online via the HMRC Childcare Service.
Warning - parents can't claim Tax-Free Childcare as well as claiming Tax Credits, Universal Credit or Childcare Vouchers. You will need to work out which scheme suits your family finances the best. Some families are worse off taking Tax-Free Childcare over Childcare Vouchers.
Find out more
Gov.uk - 10 things parents should know about Tax-Free Childcare
If you’re responsible for at least one child or young person, you may qualify for Child Tax Credit. Tax credits are payments from the Government.
As well as Child Tax Credit, you may be able to apply for Working Tax Credit. This applies if you work but have a low income.
Find out more on Tax Credits on for Gov.uk. You can also use the online Tax Credits Calculator to work out how much money you could be entitled to.
If you are working, Universal Credit can help with the costs of childcare, no matter how many hours you work.
You may be able to claim up to 85 per cent of your childcare costs if you’re eligible for Universal Credit and meet some additional conditions. The amounts you can receive in childcare costs are:
- a maximum of £646.35 per month for one child
- a maximum of £1108.04 per month for 2 or more children
Childcare support is paid in arrears. This means that you will usually pay the costs yourself, and Universal Credit will then pay you some of that money back.
The government provides a childcare calculator for you. You can get an estimate of how much you could get to help pay for approved childcare. As well as 15 and 30 hours childcare it also calculates if you might be eligible for Tax Credits, Universal Credits, Tax-free Childcare or help whilst you study.
Check if there are any additional costs to pay. This could include milk, food, nappies, late collection and registration fees.
Page last updated: 30 January 2020