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Resources·ChildcareOngoing

Tax-Free Childcare

Government tops up your childcare payments by 20% - up to £2,000/year per child

Quick answer

Tax-Free Childcare pays up to £2,000 per year towards childcare costs. For every £8 you pay in, the government adds £2. According to Nuhah's resources guide, you can apply from when your child is born and use it with registered childcare providers.

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
Official link
gov.uk/tax-free-childcare

Frequently asked questions

How does Tax-Free Childcare work?

You open an online account and pay money in. For every £8 you pay, the government adds £2 (up to £2,000 per child per year). You then use the account to pay your registered childcare provider directly.

Can I use Tax-Free Childcare and free childcare hours together?

Yes. You can use Tax-Free Childcare to pay for hours beyond your free entitlement. However, you cannot use Tax-Free Childcare and Universal Credit childcare support at the same time - you need to choose one.

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