Tax-Free Childcare

What it is

A government scheme where for every £8 you pay into a special childcare account, the government adds £2. That's essentially a 20% discount on childcare costs, up to £2,000 per child per year (£4,000 if your child is disabled).

How much you can save

Up to £500 every 3 months per child (£2,000/year). Up to £1,000 every 3 months for disabled children (£4,000/year).

Example: Your childcare bill is £250/month. You pay £200 into your childcare account. The government tops it up with £50. You use the full £250 to pay your provider.

Who can get it

Both parents (or sole parent) must be working, each earn at least the equivalent of 16 hours/week at minimum wage, each earn under £100,000 adjusted net income, and not be receiving Universal Credit at the same time.

How to apply

Apply online at gov.uk/tax-free-childcare. Same application as free childcare hours. Your provider must be registered with the scheme. You must reconfirm every 3 months.

Key things to know

• Around 800,000 eligible families aren't currently using it
• You cannot use it alongside Universal Credit childcare element - check which is better for you
• Can be used alongside free childcare hours to pay for additional hours
• Covers childminders, nurseries, nannies, after-school clubs, and some holiday camps