One of the current financial burdens of working parents in the United Kingdom is childcare. As nursery charges in certain areas are above PS300 per week and childminders costing more than PS250 per week, it has become necessary to seek measures of cutting this expense to the family budget. The Tax-Free Childcare scheme offers a real-life fix, and grants governmental help of up to PS2,000 per child every year- but apparently, hundreds of thousands of families who ought to have it are leaving it unclaimed. This detailed guide is how Tax-Free Childcare will actually operate in 2025, how to use our calculator to see how much you might save, and how to know whether this scheme is the most appropriate to the situation of your family.
What Is Tax-Free Childcare? (Simple Explanation)
Tax-Free Childcare is a project in the UK government that aims at ensuring that working parents can afford the cost of registered children care. Though it technically has nothing to do with tax, the scheme, however, is more of a top-up to your childcare expenses by the government. The government puts an additional money on top of every amount you spend on caring about your child via a special online account.
The scheme has been introduced in 2017 and covers England, Scotland, Wales, and Northern Ireland. It was created in the place of the previous Childcare Vouchers scheme, which stopped accepting new applications in October 2018. In contrast to that system, based on the employer, Tax-Free Childcare is offered to all eligible parents whether or not they are self-employed or not.
The idea behind it is simple: you deposit the money in a childcare account operated by the government, the government will add the bonus and you will use the sum of money to cover the direct payment to the registered childcare provider.
How the 20% Government Top-Up Works
Out of this Tax-Free Childcare is just a ratio. The government adds PS2 to every PS8 that you deposit in your childcare account. This is an effective way of having a 25% increase on what you pay or put it another way, the government pays one fifth of your total childcare expenses.
Here is how this would work in practice: when your nursery bill is PS1,000 every month, you would make PS800 payments to your Tax-Free Childcare account. The government then adds PS200 automatically bringing you to PS1,000 full to pay your provider. In a period of one year and more of such payments, you would save PS2,400 on childcare fees.
Top-up will automatically load when you load money into your account. It does not need any further application procedure every time, once you are on the list and valid, any qualifying payment makes the government contribution.
Who Can Use the Scheme?
Tax-Free Childcare can be offered to working parents that meet certain requirements. You and your partner (in case you are having one) should be employed as employees or on their own. The key requirements for 2025 are:
Each of you has to work at least the equivalent of 16 hours a week in the National Living Wage or National Minimum Wage. This constitutes an estimated PS195.36 per week, or PS2,539.68 in every three-month period of eligibility of workers aged 21 and above in the 2025/26 tax year.
No parent may have a net income that is adjusted above PS100,000 per annum. When either of the parents crosses such a limit, the whole family is disqualified by the scheme.
You need to possess a National Insurance number and must be a resident. The applying parent should be a British citizen, sufficiently settled or otherwise eligible by immigration.
Parents that are on maternity leave, paternity leave, adoption or shared parental leave are eligible as long as they are going back to work within 31 days of application. Likewise, when one parent is unable to work because of disability or caring services and receives some benefits, the working parent will still be eligible.
The scheme includes self-employed parents. Their first 12 months of self-employment allow those further latitude in meeting the minimum earnings choice.
What Costs the Scheme Covers
Tax-Free Childcare is applicable to the payment of the broad scope of the registered childcare services. Eligible providers include:
- Registered pre-schools and nurseries.
- Ofsted-registered childminders
- Breakfast clubs and after-school clubs.
- Play clubs and playschemes.
- There are some home childcarers (registered with a home childcare agency).
- The childcare within the domestic premises.
Before you can pay them using your account, the provider should be registered to receive Tax-Free Childcare payments. Majority of the registered childcare providers are already established though it is worth inquiring before registering with your preferred provider.
Notably, you can only assert childcare in cases where one of the key roles is the ability to work. This implies that standard nursery care should be considered as it does after-school care when you are at work, but care organized only based on social or leisure purposes would be excluded.
Tax-Free Childcare Calculator Work Out What You’ll Get
Our Tax-Free Childcare Calculator will allow you to see how much of the government assistance you might be eligible to will depend on the actual cost of childcare that you are incurring. You do not need to go through the complicated calculations using the numbers, but instead, you can type the exact situation you encounter and how much you would save in a second.
Calculator: Tax-Free Childcare Calculator
The calculator gathers your spending on childcare and displays to you the government contribution you would get, what you will have left to spend and how much you will save each year when compared to paying outside of the scheme.
Enter Your Childcare Costs
In order to use the calculator, you have to know how much you spend on childcare. Preparation requirements Before starting, get the following information:
Weekly or monthly childcare costs per child. When you have several children in childcare, you will want the number of each individually, since each child will be allowed an amount of money.
Whether there are seasonal fluctuations in your costs. A high number of parents would pay increased amounts during school holidays when they require extra wraparound care or holiday club services.
All other expenses not included in your normal fee. This may involve meals or consumable or activities charge imposed by your provider.
The calculator takes weekly or monthly numbers which automatically transforms into displaying your quarterly and annual allowances.
How Your Contribution Is Calculated
This is calculated by the simple 80/20 break up. The calculator then calculates the amount you should contribute (80 percent) against the amount the government should contribute (20 percent) when you enter in the amount that you spend on childcare.
E.g. by typing in monthly childcare costs of PS500, it would give:
- Your contribution: PS400
- Government top-up: PS100
- PS500 available as childcare.
The calculator also ensures that your expenses are above what the government is supposed to give in a quarter. In case you spend a lot of money that reaches the limit, the calculator will display the point where the limit comes in.
How the Top-Up Is Added Automatically
Once you pay in your Tax-Free Childcare account under the childcare service of the government, the system will automatically calculate and provide the relevant top-up. You do not have to make a separate request and fill in more forms.
The top-up by the government usually shows up in your account within a couple of minutes after your payment has been processed. Both your contribution and the government contribution will be displayed in your account balance clearly to be transferred to your childcare provider.
The only thing that you will need is to make the first payment to your account and then remit the money to your provider once you are ready to pay your childcare bill.
Tax-Free Childcare Savings Worked Examples
Understanding your potential savings becomes clearer through practical examples. These scenarios illustrate how different family situations translate into real financial benefits.
Example 1 – One Child, Average Nursery Costs
The Situation: Sarah has one two-year-old daughter attending nursery three days per week in the Midlands. Her nursery charges £55 per day, totalling £660 per month (roughly £165 per week).
The Calculation:
- Monthly childcare cost: £660
- Sarah pays into her account: £528
- Government top-up: £132
- Annual childcare cost: £7,920
- Annual government contribution: £1,584
- Sarah’s annual saving: £1,584
The Outcome: By using Tax-Free Childcare, Sarah reduces her annual childcare spending by nearly £1,600. Her government contribution stays well within the quarterly limit of £500, so she receives the full benefit available for her spending level.
Example 2 – Two Children Under 11
The Situation: James and Emma have two children: a three-year-old in nursery four days weekly and a seven-year-old needing after-school club provision five days per week. Nursery costs £260 per week, while after-school care costs £65 per week.
The Calculation:
- Three-year-old monthly cost: £1,127 (average)
- Seven-year-old monthly cost: £282 (average)
- Combined monthly costs: £1,409
- Parents pay into accounts: £1,127.20
- Government top-up: £281.80
- Annual combined costs: £16,908
- Annual government contribution: £3,382
The Outcome: With two children, James and Emma have two separate Tax-Free Childcare accounts, each with its own £2,000 annual limit. Their total annual saving of £3,382 makes a significant difference to the family budget. Even with substantial childcare costs, they remain within the combined annual maximum of £4,000.
Example 3 – High-Spend Childcare Users (£10k–£20k per year)
The Situation: Maria and Tom have one child in full-time London nursery care, paying £400 per week—totalling £20,800 annually. This is common in inner London, where full-time nursery fees frequently exceed £1,500 monthly.
The Calculation:
- Weekly cost: £400
- Monthly cost: £1,733 (average)
- Quarterly cost: £5,200
- Parents pay into account: £4,160 quarterly
- Government top-up: £500 quarterly (maximum reached)
- Annual government contribution: £2,000 (capped)
- Annual saving: £2,000
The Outcome: Maria and Tom hit the maximum government contribution each quarter because their childcare costs are high. They still receive the full £2,000 annual benefit, but the percentage saving is smaller relative to their total spending (approximately 9.6% rather than the full 20%). Despite this, £2,000 annually remains a substantial benefit worth claiming.
Example 4 – Parents Working Part-Time vs Full-Time
The Situation: Consider two families with identical childcare costs of £800 monthly for one child.
Family A: Both parents work full-time, each earning £35,000 annually. Family B: One parent works part-time (20 hours weekly at £12.21/hour = £244.20 weekly), while the other works full-time earning £45,000.
The Calculation for Both:
- Monthly cost: £800
- Parents pay: £640
- Government top-up: £160
- Annual government contribution: £1,920
The Outcome: Both families qualify for identical Tax-Free Childcare benefits. The part-time parent in Family B earns above the minimum threshold (£195.36 weekly for those 21+), so they meet eligibility requirements. Hours worked don’t affect the calculation—only that both parents meet minimum earnings and neither exceeds £100,000.
This demonstrates that Tax-Free Childcare works equally well for part-time and full-time working families, provided basic eligibility criteria are satisfied.
Eligibility Rules for Tax-Free Childcare (UK 2025)
Understanding the eligibility requirements in detail helps ensure you can access the scheme and maintain your entitlement over time.
Income Requirements
The income rules operate on both a minimum and maximum basis:
Minimum earnings: Each parent must expect to earn at least £2,539.68 over each three-month entitlement period if aged 21 or over. This averages to approximately £195.36 per week or £847.89 per month. The figure is based on working 16 hours weekly at the National Living Wage of £12.21 per hour (2025/26 rate).
For younger workers, the thresholds are lower, reflecting the different National Minimum Wage rates:
- Aged 18-20: Based on £10.00 per hour
- Aged under 18: Based on £7.55 per hour
You don’t need to earn this amount every single week—it’s an average expectation over the three-month period. Those on zero-hours contracts or with variable income can qualify as long as their earnings average out appropriately.
Maximum earnings: Neither parent can have an expected adjusted net income exceeding £100,000 in the current tax year. Adjusted net income includes salary, self-employment profits, rental income, investment income, and most other taxable income sources.
If either parent crosses the £100,000 threshold, the household loses eligibility entirely. This creates a cliff-edge effect worth careful consideration for those with incomes approaching this level.
Employment Requirements
Both parents (or the sole parent in single-parent households) must be working. Employment includes:
- Employees on permanent, temporary, or zero-hours contracts
- Self-employed individuals including freelancers and contractors
- Directors of limited companies
- Partners in business partnerships
The crucial requirement is earning above the minimum threshold from your work. Passive income sources like investments or rental income don’t count towards meeting the minimum earnings requirement, though they do count towards the maximum.
Self-employed parents in their first 12 months of business have additional flexibility. During this start-up period, you can qualify without meeting the minimum earnings threshold, recognising that new businesses often take time to generate consistent income. You can also choose to average your self-employment earnings over the tax year rather than each quarter.
Age Limits for Children
Tax-Free Childcare covers children from birth until:
- The 1st September following their 11th birthday for most children
- The 1st September following their 16th birthday for disabled children
In practical terms, this means you can claim throughout your child’s primary school years for after-school and holiday care. A child turning 11 in March would remain eligible until the following September.
For disabled children, the extended age limit recognises the additional childcare needs that may persist through secondary school years. Disability is defined according to standard government criteria, and these children also qualify for double the usual government contribution (up to £4,000 annually rather than £2,000).
Childcare Providers That Qualify
Your childcare provider must be registered or approved to receive Tax-Free Childcare payments. In England, this means:
- Nurseries and pre-schools registered with Ofsted
- Childminders on the Ofsted Early Years Register or registered with a childminder agency
- After-school clubs and holiday schemes registered with Ofsted
- Some school-based childcare provision
- Home childcarers registered with Ofsted or approved agencies
In Scotland, Wales, and Northern Ireland, equivalent registration bodies apply. Providers must actively sign up to receive payments through the Tax-Free Childcare system—registration alone isn’t sufficient.
You can check whether a provider accepts Tax-Free Childcare by asking them directly or searching the government’s childcare provider list through your online account.
Who Is Not Eligible
Several circumstances prevent eligibility for Tax-Free Childcare:
Benefit recipients: You cannot claim Tax-Free Childcare while receiving Universal Credit, Child Tax Credit, Working Tax Credit, or income-related benefits like Income Support or income-based Jobseeker’s Allowance.
Childcare voucher users: If you’re currently receiving childcare vouchers through your employer’s salary sacrifice scheme, you cannot simultaneously use Tax-Free Childcare. You must choose one scheme.
High earners: As mentioned, if either parent has adjusted net income exceeding £100,000, the household is ineligible.
Non-workers: If you or your partner don’t meet the minimum work and earnings requirements (without qualifying exceptions), you cannot claim.
Those receiving childcare grants or bursaries: Students or others receiving childcare funding through bursaries or grants cannot combine this with Tax-Free Childcare.
If you’re currently claiming Universal Credit, you’ll need to end that claim before Tax-Free Childcare can begin. Many families receiving Universal Credit actually get more support through its childcare element (up to 85% of costs) than they would through Tax-Free Childcare, so careful comparison is essential before switching.
How Much Can You Get? (Full Breakdown)
Understanding the financial limits of Tax-Free Childcare helps you plan your childcare payments effectively throughout the year.
Minimum and Maximum Contribution Amounts
There’s no minimum amount you must pay into your Tax-Free Childcare account. Even small payments receive the 20% government top-up, making the scheme beneficial regardless of your childcare spending level.
The maximum government contribution per child is:
- Standard: £500 per quarter (£2,000 annually)
- Disabled children: £1,000 per quarter (£4,000 annually)
To receive the maximum £500 quarterly government contribution, you need to pay £2,000 into your account that quarter (since £2,000 × 25% = £500 top-up). This means using Tax-Free Childcare for £2,500 of childcare costs per quarter, or £10,000 annually per child.
If your childcare costs exceed £10,000 per child per year, you’ll still receive the full £2,000 government contribution but won’t get additional top-ups beyond that point.
Annual £2,000–£4,000 Limits
Each eligible child has their own Tax-Free Childcare account with its own separate limit. For families with multiple children:
Two children (neither disabled): Maximum annual government contribution of £4,000 combined (£2,000 per child)
Two children (one disabled): Maximum annual government contribution of £6,000 (£2,000 + £4,000)
Three children (none disabled): Maximum annual government contribution of £6,000 (£2,000 × 3)
The per-child structure means larger families can receive substantial total support, though each child’s limit operates independently.
Monthly Contribution Cap
While the official limits are expressed quarterly, many parents think in monthly terms. Breaking down the figures:
Monthly maximum government top-up (standard child): Approximately £166.67
Monthly childcare spending to maximise this: Approximately £833.33
In practice, most parents make regular monthly payments aligned with their childcare billing cycle. The quarterly limits provide some flexibility—if you underspend one month, you can make larger payments in subsequent months to maximise your entitlement within each quarter.
How to Make Payments into Your Online Account
Funding your Tax-Free Childcare account is straightforward. Once registered, you can:
Bank transfer: Set up a standing order or make one-off payments to your unique account reference number. Most parents establish a regular standing order matching their expected childcare costs.
Debit card: Make immediate payments directly through your online childcare account using any UK debit card.
Payments typically reach your account within two to three working days for bank transfers, or immediately for debit card payments. The government top-up is added automatically once your payment clears.
To pay your childcare provider, you simply:
- Log into your childcare account
- Select the provider (you’ll have added them during setup)
- Enter the payment amount
- Confirm the payment
Payments to providers are made via the BACS system and typically arrive within three to five working days. Some providers prefer you to pay in advance of care; others accept payment after invoicing. Discuss timing with your provider to ensure payments align with their billing expectations.
Tax-Free Childcare vs Other Childcare Schemes
Tax-Free Childcare isn’t the only government support available for childcare costs. Understanding how it compares to alternatives helps you choose the most beneficial option for your circumstances.
Tax-Free Childcare vs Childcare Vouchers
Childcare Vouchers closed to new applicants in October 2018, but many parents who were already enrolled continue using them. If you’re one of them, you might wonder whether to switch.
Childcare Vouchers work differently: They’re a salary sacrifice arrangement where your employer deducts vouchers from your pre-tax salary. You save on income tax and National Insurance on the sacrificed amount.
Maximum savings depend on your tax rate:
- Basic rate taxpayers (2025/26): Up to £933 annually
- Higher rate taxpayers: Up to £624 annually
- Additional rate taxpayers: Up to £590 annually
If both parents use vouchers through their employers, these figures double.
Key comparison points:
- Tax-Free Childcare offers higher potential savings (up to £2,000 per child) for most families
- Childcare Vouchers may still benefit higher-rate taxpayers if both parents participate
- Childcare Vouchers aren’t available to the self-employed; Tax-Free Childcare is
- You cannot use both schemes simultaneously
If you’re currently on childcare vouchers, use the government’s childcare calculator to compare your specific situation before switching. Once you leave vouchers for Tax-Free Childcare, you cannot return to the voucher scheme.
Tax-Free Childcare vs Universal Credit Childcare
Universal Credit’s childcare element operates very differently from Tax-Free Childcare and is often more generous for eligible families.
Universal Credit childcare support:
- Covers up to 85% of eligible childcare costs
- Maximum monthly limits: £1,031.88 for one child, £1,768.94 for two or more children (2025/26 rates)
- Paid as part of your Universal Credit payment
- Requires you to pay costs first, then claim reimbursement
Maximum annual support through Universal Credit:
- One child: Up to approximately £12,383
- Two or more children: Up to approximately £21,227
Compared to Tax-Free Childcare’s maximum £2,000 per child, Universal Credit’s childcare element provides substantially more support for eligible families. However, Universal Credit eligibility is means-tested and reduces as your income increases.
Critical rule: You cannot claim both Universal Credit and Tax-Free Childcare simultaneously. If you’re receiving Universal Credit, stick with its childcare element rather than switching schemes.
Use the government’s benefit calculator to determine whether Universal Credit (if you qualify) or Tax-Free Childcare provides better support for your specific circumstances.
Tax-Free Childcare vs 30 Hours Free Childcare
The “30 Hours Free Childcare” scheme (officially called Free Childcare for Working Parents) provides government-funded nursery hours for eligible children. From September 2025, eligible working parents in England can access 30 hours of funded childcare weekly from when their child is 9 months old until they start school.
Important: Tax-Free Childcare and 30 Hours Free Childcare are not mutually exclusive—you can claim both simultaneously if eligible.
How they work together:
- 30 Hours provides free sessions at your nursery (up to 1,140 hours annually)
- Tax-Free Childcare helps pay for hours beyond the free allocation, plus meals, consumables, and other charges
Many families use their 30 free hours to cover core nursery sessions, then use Tax-Free Childcare for:
- Additional hours beyond the funded 30
- Holiday club costs during school holidays
- Before-school or after-school clubs
- Provider charges not covered by the free entitlement (meals, activities, etc.)
Eligibility overlaps significantly: Both schemes require parents to work and earn between the minimum wage threshold and £100,000. If you qualify for one, you likely qualify for the other.
Which Scheme Saves You the Most? (Comparison Table)
General guidance:
- If you’re on a low income, check Universal Credit eligibility first—it typically offers the greatest support
- If you’re a middle-income working family, combine 30 Hours (if eligible) with Tax-Free Childcare
- If you’re still on Childcare Vouchers, compare carefully before switching—some higher earners may be better staying put
The government’s childcare calculator at GOV.UK helps compare your specific options and is worth using before making any decisions.
Tax-Free Childcare Calculator Results (Charts + PDF)
Our calculator provides visual representations of your potential savings, making it easy to understand your benefits at a glance.
Savings Chart (Monthly vs Yearly)
After entering your childcare costs, the calculator generates a visual breakdown showing:
Monthly view: Your payment, the government top-up, and total funds available each month. This helps you see exactly how much to budget for your regular childcare payments.
Annual view: Your total yearly costs, government contributions over 12 months, and cumulative savings compared to paying without the scheme.
The chart also highlights if you’re likely to hit quarterly or annual limits, showing you where maximum benefits apply and whether you might consider adjusting payment timing to optimise your entitlement.
Download Your Calculation as a PDF
Once you’ve completed your calculation, you can download a PDF summary containing:
- Your entered childcare costs and child details
- Calculated government contributions (quarterly and annual)
- Your required payments to receive maximum benefits
- A payment schedule suggestion for optimal top-up receipt
- Summary of eligibility requirements you’ll need to meet
[Download Your Calculation as PDF – Button]
This PDF serves as a useful reference when budgeting for childcare costs and can help when discussing payment arrangements with your childcare provider.
How Your PDF Is Generated (Methodology)
Our calculator uses the official Tax-Free Childcare formula and 2025/26 limits to generate your results:
- Input processing: Your childcare costs are validated and converted to quarterly figures
- Top-up calculation: We apply the 80/20 split (your 80% payment triggers 20% government contribution)
- Limit checking: Results are checked against the £500 quarterly cap per child (£1,000 for disabled children)
- Annual aggregation: Quarterly figures are annualised to show your full-year entitlement
- PDF generation: Results are formatted into a downloadable document
The calculations follow HMRC’s published methodology and reflect current 2025/26 limits and thresholds. However, as noted in our disclaimer, results should be verified against the official government service before making financial decisions.
Step-by-Step Guide – How to Apply for Tax-Free Childcare
Applying for Tax-Free Childcare is done entirely online through the government’s Childcare Service. Here’s a detailed walkthrough of the process.
Create Your Government Gateway Account
If you don’t already have a Government Gateway account, you’ll need to create one:
- Visit GOV.UK and search for “Tax-Free Childcare”
- Click “Apply now” to begin the application
- Select “Create sign in details” if you’re a new user
- Enter your email address and create a password
- You’ll receive a 12-digit User ID—save this securely
If you already have a Government Gateway account (perhaps from self-assessment or other government services), you can use your existing login details.
Your Government Gateway account becomes your central hub for managing childcare support applications and payments.
Verify Your Identity
The application process includes identity verification to ensure security:
- You’ll be asked for personal details including your National Insurance number
- Enter your current address and date of birth
- Answer security questions based on information known to HMRC (these might relate to previous tax returns, employers, or benefits)
- In some cases, additional verification may be required
If you have difficulty verifying online, the Childcare Service helpline can assist with alternative verification methods. Keep your National Insurance number, recent payslips, and P60 handy during the application.
Add Your Children
For each child you want to claim for:
- Enter their full name as it appears on their birth certificate
- Provide their date of birth
- Confirm they usually live with you
- Indicate if they have a disability (for the enhanced £4,000 annual limit)
- Add their birth certificate details if requested
Each child will have their own childcare account once your application is approved. You’ll add children one at a time, completing eligibility checks for each.
Add Your Childcare Provider
Before you can make payments, you need to link your provider:
- Search for your provider by name, location, or Ofsted registration number
- Verify you’ve selected the correct provider (check address and details)
- Add them to your account
If your provider doesn’t appear in the search results, they may need to register with the Childcare Service first. Contact them to confirm they’re set up to receive Tax-Free Childcare payments.
You can add multiple providers to your account if your child attends different settings (for example, a nursery plus an after-school club).
Start Making Payments
Once approved and your provider is linked:
- Log into your childcare account at any time
- Choose to make a payment to your account
- Pay by debit card (immediate) or set up a bank transfer (2-3 days)
- The government top-up is added automatically when your payment clears
- Select your provider and enter the payment amount
- Confirm the payment to your provider
Payments to providers typically arrive within 3-5 working days via BACS. Plan your payments to ensure funds arrive before your provider’s payment deadline.
Remember: you must reconfirm your eligibility every three months through your online account. HMRC will send reminders before reconfirmation is due, but missing the deadline can cause your account to become temporarily inactive.
Common Mistakes Parents Make
Avoiding these frequent errors ensures you get maximum benefit from Tax-Free Childcare without administrative problems.
Using the Wrong Scheme
The most costly mistake is not comparing all available options before committing:
Families eligible for Universal Credit often get substantially more support through its childcare element (85% of costs) than Tax-Free Childcare (20%). If your income qualifies you for Universal Credit, check its childcare support before applying for Tax-Free Childcare.
Parents still on Childcare Vouchers may be better off staying on that scheme, particularly if both parents are higher-rate taxpayers with employers offering generous voucher amounts.
Solution: Always use the government’s childcare calculator at GOV.UK/childcare-calculator before applying. This compares all schemes based on your specific circumstances and shows which offers the greatest benefit.
Not Paying in Enough
The government top-up only applies to money you actually pay into your account. Common issues include:
Paying directly to providers: If you pay your nursery directly instead of through your Tax-Free Childcare account, you won’t receive any government contribution on those payments.
Underpaying some quarters: The quarterly limits don’t roll over. If you only pay £1,000 into your account one quarter (receiving £250 government top-up), you can’t claim the unused £250 in the following quarter.
Solution: Pay all eligible childcare costs through your Tax-Free Childcare account, and aim to pay consistently to maximise each quarter’s entitlement. If costs vary seasonally, consider paying extra during lower-cost months to build up credit for higher-cost periods.
Forgetting Quarterly Reconfirmation
Tax-Free Childcare requires you to reconfirm your eligibility every three months. If you miss the reconfirmation:
- Your account becomes temporarily inactive
- You cannot receive government top-ups until you reconfirm
- You may miss payments to providers
- In some cases, money already in your account could be affected
HMRC sends reminders via email and text before reconfirmation is due, but these can be missed or overlooked during busy periods.
Solution: Set calendar reminders for reconfirmation dates. Log into your account monthly to check for any notifications. Keep your contact details updated so you receive HMRC reminders.
Choosing Providers Who Aren’t Registered
Not all childcare providers accept Tax-Free Childcare payments. Common scenarios causing problems:
- Providers who haven’t registered with the Childcare Service
- Unregistered childminders or informal carers
- Relatives providing care (unless they’re registered childminders caring for your child outside your home)
- Providers whose registration has lapsed
Solution: Before booking childcare, confirm with the provider that they’re registered to receive Tax-Free Childcare payments. You can also search for them through your online childcare account to verify their registration status.
Frequently Asked Questions (FAQ)
How much can I claim per child?
The maximum government contribution through Tax-Free Childcare is £2,000 per child per year for children without disabilities. For disabled children, the maximum increases to £4,000 per year. To receive the full £2,000, you need to pay £8,000 into your childcare account annually (the government adds 25% on top, giving you £10,000 total for childcare). If your childcare costs are lower, you’ll receive proportionally less—but still get the valuable 20% government top-up on whatever you do spend.
Can I use tax-free childcare with 30 hours free childcare?
Yes, you can use both schemes simultaneously if you’re eligible for each. Many families do exactly this: they use their 30 funded hours for core nursery sessions, then use Tax-Free Childcare to pay for additional hours beyond the funded allocation, meals and consumables charged by the provider, holiday club costs during school breaks, and before-school or after-school provision. The eligibility criteria for both schemes are similar, so if you qualify for one, you’ll likely qualify for the other.
How long does it take to get the top-up?
The government top-up is added to your account automatically and very quickly. When you pay into your Tax-Free Childcare account by debit card, the top-up typically appears within minutes. For bank transfers, allow 2-3 working days for your payment to clear, after which the top-up is added immediately. Payments from your childcare account to your provider take an additional 3-5 working days via BACS. Plan ahead so funds arrive before your provider’s payment deadline.
Is Tax-Free Childcare worth it?
For most eligible working families, Tax-Free Childcare is definitely worth using. A free 20% government contribution to your childcare costs is money you wouldn’t otherwise receive. The only situations where it might not be the best choice are if you’re eligible for Universal Credit (which offers up to 85% childcare support), if you’re already on Childcare Vouchers and receiving higher benefits through that scheme (rare, but possible for some higher earners), or if your childcare provider isn’t registered to receive Tax-Free Childcare payments. Otherwise, the scheme provides genuine, tangible savings with relatively little administrative burden once set up.
What if my income changes?
If your income increases above the £100,000 threshold for either parent, you’ll need to stop using Tax-Free Childcare. You must inform HMRC of the change through your childcare account. If your income drops below the minimum threshold (approximately £2,540 per quarter), you also become ineligible unless you qualify through an exception such as maternity leave or disability. Temporary income changes, such as a gap between jobs, are handled flexibly—you can remain eligible for up to 31 days while between jobs. Always report significant income changes to maintain compliance and avoid potential repayment requests.
What happens if I stop being eligible?
If you become ineligible for Tax-Free Childcare, any money already in your account remains yours and can still be used to pay your childcare provider—but the government will stop adding top-ups to new payments. You should use up your existing balance before eligibility ends. If you receive government top-ups while actually ineligible (for example, if you didn’t report an income change), HMRC may request repayment of those contributions. You can reapply if your circumstances change and you become eligible again in the future.
Do both parents need to be working?
In two-parent households, generally yes—both parents must be working and meeting the minimum earnings threshold. However, there are exceptions. If one parent is working while the other receives certain disability benefits (such as Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance, or contribution-based Employment and Support Allowance), the working parent can qualify alone. Similarly, if one parent is temporarily unable to work due to disability or caring for someone with a disability, the family may still be eligible. Single-parent households need only the one parent to meet work requirements.
Can self-employed parents use the scheme?
Yes, self-employed parents are fully eligible for Tax-Free Childcare. You must expect to earn at least the minimum threshold (approximately £2,540 per quarter) from your self-employment. Those in their first year of self-employment have additional flexibility—you can qualify during the start-up period even before your earnings reach the threshold, and you can choose to average your earnings over the tax year rather than meeting the threshold each quarter. Self-employed parents go through the same application process and receive the same benefits as employed parents. You’ll need to report your self-employed earnings during reconfirmation every three months.
Disclaimer
This calculator is for guidance only
The Tax-Free Childcare Calculator provided on this website is designed as an educational and planning tool. While we strive for accuracy and keep our calculations updated with the latest official figures, the results produced are estimates and should not be treated as guaranteed entitlements.
Your actual Tax-Free Childcare eligibility and entitlement will be determined by HMRC through the official application process. Various factors specific to your circumstances may affect your eligibility that our calculator cannot fully assess.
We recommend using this calculator to understand the general benefits available and to assist with financial planning, but all results should be verified through the official government channels before making financial decisions based on them.
Always check the latest rules on GOV.UK
Government policies, rates, and eligibility criteria can change. The figures and rules presented in this guide reflect our understanding of Tax-Free Childcare as of 2025, but you should always verify current information through official sources.
For the most up-to-date and accurate information about Tax-Free Childcare, including any recent changes to eligibility rules, contribution limits, or application procedures, visit: www.gov.uk/tax-free-childcare
The government’s official childcare calculator, which compares all available schemes based on your specific circumstances, is available at: www.gov.uk/childcare-calculator
If you have specific questions about your eligibility or circumstances, contact the Childcare Service helpline directly or consult a qualified financial adviser.