Who is eligible for Tax-Free Childcare?

You must be working and earning at least the National Minimum Wage for 16 hours per week (around £8,670 per year in 2025/26). Neither parent can earn over £100,000 adjusted net income. Your child must be under 12 (or 17 if disabled). You cannot claim if you receive Universal Credit, tax credits, or are currently using childcare vouchers for the same child.

Is Tax-Free Childcare better than childcare vouchers?

Tax-Free Childcare gives 20% back on costs up to £10,000 per child. Childcare vouchers saved up to 32% for basic rate taxpayers but the scheme closed to new entrants in October 2018. For most families, TFC is better if childcare costs exceed £3,500 per year per child. You cannot use both schemes simultaneously for the same child.

Tax-Free Childcare Calculator 2025/26

Calculate Your Tax-Free Childcare

Enter your annual childcare costs to see how much government top-up you could receive through the Tax-Free Childcare scheme.

Total Annual Childcare Costs (£) Include nursery, childminder, after-school clubs

Number of Eligible Children

Children with Disability (DLA/PIP) Receiving DLA, PIP, or registered blind

Higher Earner's Annual Income (£) Must be under £100,000 to qualify

Eligibility Checks

Both parents working (or single parent working)

Working at least 16 hours/week at NMW

Using Ofsted-registered provider

NOT receiving Universal Credit or Tax Credits

You Pay In

£0

Into childcare account

Government Adds£0
20% top-up

Total Available

£0

For childcare

Annual Savings

£0

Your benefit

Quarterly Breakdown

How Tax-Free Childcare Works

Tax-Free Childcare is a government scheme that helps working families with childcare costs. For every £8 you pay into your online childcare account, the government adds £2, giving you a 20% top-up on your payments.

Apply online - Check eligibility and open an account via the Childcare Choices website. You'll get a unique online childcare account.
Pay money in - Transfer funds from your bank account to your Tax-Free Childcare account. You can pay in up to £8,000 per year per child (£16,000 for disabled children).
Receive 20% top-up - The government automatically adds 20% to your payments, up to £2,000 per child per year (£4,000 for disabled children).
Pay your provider - Use the account to pay your Ofsted-registered childcare provider directly. The money can only be used for childcare.
Reconfirm every 3 months - You must log in and confirm you're still eligible every quarter to continue receiving the top-up.

Important: Don't Miss Reconfirmation

You must reconfirm your eligibility every 3 months. If you miss the deadline, your account will be suspended and you won't receive top-ups until you reconfirm. Set a calendar reminder!

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Tax-Free Childcare Eligibility Requirements

Both parents (or the single parent in a lone-parent family) must meet all the following criteria to qualify for Tax-Free Childcare:

Work Requirements

Requirement	Details
Minimum earnings	At least 16 hours per week at National Minimum Wage = £8,670/year (2025/26)
Maximum earnings	Neither parent can have adjusted net income over £100,000
Employment status	Employed, self-employed, or company director
Starting work	Can apply if starting/returning to work within 31 days

Child Requirements

Category	Age Limit	Max Top-Up
Standard child	Under 12 (up to 1 September after 11th birthday)	£2,000/year
Disabled child	Under 17 (receiving DLA, PIP, or registered blind)	£4,000/year
Adopted children	Same as above based on circumstances	£2,000-£4,000/year

You Cannot Claim If:

Receiving Benefits

Universal Credit
Tax Credits (Working/Child)
Income Support
Jobseeker's Allowance (income-based)

Other Restrictions

Using childcare vouchers for same child
In full-time education (unless working 16+ hrs)
Non-UK resident (exceptions apply)
Receiving support from Northern Ireland scheme

Self-Employed Considerations

Self-employed parents can apply but must expect to meet the minimum earnings threshold. If your business hasn't been running for 12 months, you can use expected earnings. HMRC may check your Self Assessment returns to verify eligibility.

Tax-Free Childcare vs Other Schemes

Understanding how Tax-Free Childcare compares to other government childcare support helps you choose the best option for your family.

Tax-Free Childcare

Up to £2,000/year

Per child (£4,000 if disabled)

20% government top-up
Pay £8,000, get £10,000 childcare
Children under 12 (17 if disabled)
Both parents must work 16+ hours
Income limit: £100,000 each

Childcare Vouchers (Closed)

Up to £933/year

Tax/NI savings (basic rate)

Closed to new entrants Oct 2018
Existing users can continue
Save 32% (basic rate taxpayer)
Max voucher £55/week per parent
Cannot use with TFC for same child

30 Hours Free Childcare

1,140 hours/year

For 3-4 year olds (term-time)

38 weeks × 30 hours = 1,140 hours
Can combine with TFC for extras
Both parents must work 16+ hours
Same income requirements as TFC
Applied via Childcare Choices

Universal Credit Childcare

Up to 85% of costs

Max £1,014/month (2 children)

Up to £646/month (1 child)
Up to £1,108/month (2+ children)
Paid in arrears after evidence
Cannot use with TFC
Often better for lower earners

When TFC is Better Than Childcare Vouchers

Tax-Free Childcare is usually better if your annual childcare costs exceed £3,500 per child (for basic rate taxpayers) or if you have multiple children. Use our calculator to compare your specific situation. Remember: you can keep existing vouchers but cannot use them for the same child as TFC.

Eligible Childcare Providers

You can only use Tax-Free Childcare money to pay registered childcare providers. The provider must sign up to receive TFC payments.

Eligible Providers Include:

Nurseries - Ofsted-registered nurseries and day nurseries
Childminders - Registered childminders
Nannies - Ofsted-registered nannies
Au pairs - Only if Ofsted-registered (rare)
After-school clubs - Registered out-of-school clubs
Holiday clubs - Registered holiday playschemes
Breakfast clubs - School-based or external registered clubs
Home childcarers - If working on domestic premises and registered

NOT Eligible:

Relatives (grandparents, aunts, uncles) unless Ofsted-registered
Unregistered babysitters
Child's parent/step-parent
Partners in the same household
Foster carers (for foster children)

Check Provider Registration

You can check if a provider is registered with Ofsted using the Ofsted register. Providers must also sign up to receive TFC payments - ask them if they're registered to receive Tax-Free Childcare.

Maximum Support by Situation

Family Situation	You Pay (Max)	Gov't Adds	Total Childcare
1 child (standard)	£8,000/year	£2,000/year	£10,000/year
1 child (disabled)	£16,000/year	£4,000/year	£20,000/year
2 children (standard)	£16,000/year	£4,000/year	£20,000/year
3 children (standard)	£24,000/year	£6,000/year	£30,000/year
2 children (1 disabled)	£24,000/year	£6,000/year	£30,000/year

Quarterly Limits Apply

The government top-up is capped at £500 per quarter per child (£1,000 for disabled children). If you pay in more than £2,000 per quarter per child, the excess won't receive a top-up until the next quarter. Plan your payments to maximize the benefit!

Frequently Asked Questions

The government adds 20% to your childcare payments, up to £2,000 per child per year (£500 per quarter). For disabled children receiving DLA, PIP, or registered blind, the limit doubles to £4,000 per year (£1,000 per quarter). You pay £8,000 and receive £10,000 of childcare; pay £16,000 and receive £20,000 for a disabled child.

Yes! You can use both schemes together. The 30 hours free childcare covers term-time hours for 3-4 year olds, while Tax-Free Childcare can be used to pay for additional hours, meals, activities, or childcare during school holidays. Both are applied for through the same Childcare Choices website.

Normally both parents must be working. However, if one parent is not working due to being on Carers Allowance, incapacity benefits (ESA, PIP), Statutory Sick Pay, or parental leave (maternity/paternity/adoption), you can still qualify. Also, if one parent is starting work within 31 days, you can apply before they start.

Most applications are approved immediately after identity verification. However, some applications require additional checks and can take up to 7 working days. You'll receive a decision via email. Once approved, you can immediately start paying into your childcare account and receive the government top-up.

Yes, but you cannot use both for the same child at the same time. If you switch to TFC, you must stop receiving vouchers for that child. You can keep vouchers for one child and use TFC for another. Once you leave a voucher scheme, you cannot rejoin as they closed to new entrants in October 2018.

Money in your Tax-Free Childcare account doesn't expire as long as you have an eligible child. However, if you fail to reconfirm eligibility, your account is suspended and you won't receive top-ups. You can still spend existing funds. If all your children become ineligible, you have 90 days to spend remaining funds or request a refund (minus any government top-up received).

Yes! Anyone can pay money into your Tax-Free Childcare account, including grandparents, other family members, or friends. The government will add 20% top-up regardless of who pays in. This can be a tax-efficient way for grandparents to help with childcare costs - they get no direct tax benefit, but you receive the 20% government contribution on their payments.

The limit is based on "adjusted net income" - your total taxable income minus pension contributions and Gift Aid donations. It's the same calculation used for the High Income Child Benefit Charge. If either parent earns £100,000 or more after these adjustments, the family is not eligible. Salary sacrifice pension contributions are particularly useful for reducing income below the threshold.

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Helen Thompson

CACHE Level 3 | Family Finance Advisor

Helen is a qualified early years professional and family finance advisor with over 10 years of experience helping UK families navigate childcare funding options. She has guided hundreds of parents through the Tax-Free Childcare application process.

Disclaimer

This calculator provides estimates based on current Tax-Free Childcare rules. Eligibility decisions are made by HMRC based on your individual circumstances. Always apply through the official GOV.UK Childcare Choices website. Tax rules can change - this information was last updated January 2026.

Tax-Free Childcare Calculator 2025/26 | Government 20% Top-Up UK