Tax-Free Childcare Calculator
Tax-Free Childcare (TFC) gives you a 20p government top-up for every 80p you pay into your childcare account. Maximum government top-up: £2,000 per child per year (£4,000 for disabled children). Both parents must be working and earning between £8,748 and £100,000/year each.
Frequently Asked Questions
What is Tax-Free Childcare?
Tax-Free Childcare (TFC) is a government scheme where HMRC adds 20p for every 80p you deposit into an online childcare account. The government top-up is worth up to £2,000 per year per child (£4,000 for disabled children), giving you effectively 20% off eligible childcare costs.
Who qualifies for Tax-Free Childcare?
Both parents must be working and earning at least £8,748/year each (equivalent to 16 hours at NMW). Neither parent can earn over £100,000/year. Self-employed parents on parental leave or recently started can still qualify. You cannot use TFC at the same time as childcare vouchers, tax credits, or Universal Credit childcare.
What childcare does Tax-Free Childcare cover?
TFC covers Ofsted-registered nurseries, childminders, after-school clubs, holiday clubs, and breakfast clubs. Providers must be signed up to the TFC scheme. You pay the provider from your TFC account using the account funds (your contribution + the top-up).
What age children can benefit from Tax-Free Childcare?
TFC is available for children up to age 11 (or 16 for disabled children). For children over 12, TFC stops. The 30 free hours offer (for working parents) covers children aged 9 months to school entry.
What is the maximum government top-up?
The government adds 20p for every 80p you pay — capped at £2,000 per year per child (£500 per quarter). For disabled children, the cap is £4,000 per year (£1,000 per quarter). There is no cap on how much you pay beyond what triggers the top-up maximum.
Can self-employed parents use Tax-Free Childcare?
Yes. Self-employed people can use TFC. The earnings must be at least £8,748/year (based on expected earnings). HMRC applies a minimum income floor based on the National Minimum Wage × 16 hours/week. Newly self-employed within the first 12 months have a grace period.
What are the 30 free hours of childcare?
Working parents of 3–4 year olds can access 30 hours of free childcare per week during term time (38 weeks). From September 2024, the scheme was extended to cover children from 9 months, starting with 15 free hours. Free hours are separate from TFC but complementary.
Can I use TFC and the 30 free hours together?
Yes. You can use Tax-Free Childcare top-up for costs above the free hours entitlement. For example, if nursery costs £1,000/month and the free hours cover £500/month, you pay £500 through TFC and receive a £125 top-up.
What is the difference between Tax-Free Childcare and childcare vouchers?
Childcare vouchers (closed to new entrants since October 2018) worked as salary sacrifice — reducing income before NIC. TFC provides a direct 20% top-up. Existing voucher scheme members can choose to stay on vouchers or switch to TFC (but cannot use both simultaneously).
How do I open a Tax-Free Childcare account?
Apply online at gov.uk/tax-free-childcare through HMRC's Childcare Choices service. Both parents apply separately. Once approved, you can deposit money into a government-backed childcare account (operated by NS&I) and use the funds to pay registered providers.
What happens to Tax-Free Childcare if I have a third child?
Each child has their own TFC account and allowance. You get £2,000 per child per year (up to 3 accounts open simultaneously for different age children). Managing multiple accounts is done through the single gov.uk portal.
Can grandparents use Tax-Free Childcare?
No. Tax-Free Childcare is only available to parents and legal guardians who are the child's primary carers. Grandparents who are registered childminders can receive payments from a parent's TFC account as a provider.