How much does Tax-Free Childcare give me?

The government adds £2 for every £8 you pay in, which is 20% of your childcare bill, up to £500 every 3 months per child (£2,000 a year), or £1,000 every 3 months (£4,000 a year) for a disabled child.

Can I use Tax-Free Childcare with 30 funded hours?

Yes. You can use it to pay for hours on top of your funded hours and for extras the nursery supplies, such as meals.

Can I get Tax-Free Childcare and Universal Credit?

No, not at the same time. Work out which helps you more first, and wait for a decision on Tax-Free Childcare before ending a Universal Credit claim.

Does my nursery have to accept it?

The nursery must be registered and signed up to the scheme. Most nurseries are, but check before you apply.

Tax-Free Childcare explained

Tax-Free Childcare is a government top-up on childcare you pay for. You pay money into an online childcare account, the government adds £2 for every £8 you put in, and you pay your nursery from the account. It is run by HMRC and is separate from funded hours, so many families use both.

How much you get

For every £8 you pay in, the government adds £2. That means the government pays 20% of your bill and you pay 80%.
The top-up is capped at £500 every 3 months per child, which is up to £2,000 a year.
For a disabled child the cap is £1,000 every 3 months, up to £4,000 a year.

The cap is per child, so two children have two caps. The £500 cap covers a bill of up to £2,500 every 3 months; above that you pay the rest yourself.

Example: your nursery bill is £1,200 a month, or £3,600 every 3 months. 20% of £3,600 is £720, but the top-up is capped at £500, so you pay in £3,100 and the government adds £500. Our Tax-Free Childcare calculator does this for your bill.

Who qualifies

You can usually get Tax-Free Childcare if:

you (and your partner, if you have one) are working, including being on sick, annual or parental leave
you each expect to earn at least the minimum wage for 16 hours a week on average over the next 3 months
neither of you expects adjusted net income over £100,000 in the current tax year
your child is 11 or under (eligible until the September after their 11th birthday), or 16 or under if disabled
you are not claiming Universal Credit or childcare vouchers

There are exceptions, for example if one partner is not working but gets Carer’s Allowance or certain disability benefits. Check gov.uk for the details, or use our funded hours checker.

Using it with funded hours

Tax-Free Childcare works well alongside the 30 hours for working parents. Your funded hours cover part of the week, and Tax-Free Childcare takes 20% off what is left, including extras the nursery supplies such as meals, nappies and trips.

When you apply for the working-parent hours, HMRC checks whether you are eligible for Tax-Free Childcare in the same application.

Tax-Free Childcare or Universal Credit?

You cannot get both at the same time. Universal Credit childcare can pay back up to 85% of costs, but only within Universal Credit’s limits and taking your other income into account. For some families on lower incomes it is worth more; for others Tax-Free Childcare is. Use a benefits calculator or the government’s childcare calculator, and wait for a decision on Tax-Free Childcare before cancelling a Universal Credit claim.

If you get childcare vouchers from an employer, you must tell your employer within 90 days of applying for Tax-Free Childcare so the vouchers stop.

How to apply and keep it

Apply online on gov.uk. You need your National Insurance number, and your Unique Taxpayer Reference if you are self-employed.
Check your nursery is signed up, then add it to your account.
Pay money in whenever you like; the top-up is added automatically.
Reconfirm your details every 3 months in your account, or the top-ups stop.

Money you pay in can be withdrawn, but you lose the matching top-up.

How to see the effect on your bill

Start with the monthly cost after funded hours in our childcare cost calculator, then follow its link to the Tax-Free Childcare calculator with the bill already filled in. Our area pages also let you filter for nurseries that accept Tax-Free Childcare.