The Government’s Tax-Free Childcare scheme offers up to £2000 a year per child towards childcare costs, including nursery, childminders and wrap-around care….


…..1.3 million families are eligible, but around a million aren’t currently using this benefit. While there are other schemes available, if you’ve got children and you’re returning to work after the summer break, the chances are you could save some cash with Tax-Free Childcare.” –  Money Saving Expert


The Government-backed Tax-Free Childcare scheme is designed so that for every 80p you put into your Tax-Free Childcare account, the state will add 20p. It essentially gives you basic-rate tax back on your bill – hence the scheme’s name.


In short, this is what you can get:

Eligible parents can claim up to £2,000 per child per year. In total you can use the scheme to help pay for up to £10,000 of childcare per child each year – giving you an extra £2,000 per child (up to £4,000 if your child is disabled) each year.

You can open an online Tax-Free Childcare account using your Government Gateway ID and for every 80p you pay in, the government will top up your account.


You will qualify for Tax-Free Childcare if you are in work, including if you’re self-employed. If you have a partner, you both need to be in work to qualify.


To qualify, you (and your partner, if you have one) need to be working and:

Each earn a minimum of £152 a week but each earn less than £100,000 a year. This means if both partners earn £99,999 you can qualify, but if one earns £30,000 and the other £150,000 you won’t.

Your partner doesn’t have to be the other parent – it’s all based on who you live with.

Tax-Free Childcare covers your usual range of providers, such as:

  • Breakfast clubs and after school clubs
  • Childminders
  • Nurseries
  • Playgroups
  • Nannies
  • Au-pairs
  • Holiday Clubs

The important part is that your provider must be registered with the scheme. You can find this information when you create and log into your online account.

Government Tax-Free Childcare site. have put together a list of seven need-to-knows when it comes to Tax-Free Childcare:

  1. You can get up to £2000 per child each year towards childcare costs.
  2. The scheme is available to all workers including the self-employed.
  3. Your child must be 11 or younger (or 17 if your child has a disability).
  4. You’ll need to earn at least £152 a week but less than £100,000 a year.
  5. You can use it for all sorts of childcare – including breakfast and afterschool clubs.
  6. How it works and how to sign up.
  7. You must reconfirm every three months or risk missing out on the top up.

Click the above points to read more about each.


Other things to consider

If your household income is under £40,000, Universal Credit could help – the savings are usually better than those from Tax-Free Childcare.


If you (and your partner) are working and you pay for childcare, you could claim back up to 85% of your childcare costs through universal credit. You can’t claim both this and Tax-Free Childcare, so before you consider Tax-Free Childcare it’s worth checking if you’re eligible for universal credit as it will most likely cover more of the cost of childcare.


So… how do you find out if you are eligible?

It can be a little complex when it comes to who is entitled, if your combined household income is less than £40,000 a year use the Universal Credit and Benefits Calculator to check if you’re eligible. Other households with a higher income, but higher childcare costs may also be eligible, so make sure to check via the calculator or use the free universal credit helpline on 0800 328 5644


There are different allowances available for those in Northern Ireland, Scotland and Wales.



Key points to note:

  • You can claim universal credit or tax credits and get the 30 hours of free childcare in England at the same time.
  • You can’t claim Tax-Free Childcare alongside universal credit.
  • You can use universal credit with childcare vouchers, the scheme which Tax-Free Childcare replaced, but which is still available for some.



Which is better for you? Vouchers or Tax-Free Childcare?

Click here to find out and read frequently asked questions.


Information taken from ‘Tax-Free Childcare – How it works and how to benefit’ by Amalia Illgner, edited by Johanna Noble, from

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