Tax-Free Childcare: Complete Guide for UK Parents (2026)

What is Tax-Free Childcare?

Tax-Free Childcare is a UK government scheme that tops up your childcare payments by 20%. For every £8 you pay into your government childcare account, the government adds £2 — up to a maximum of £2,000 per child per year.

That means if you spend £10,000 on childcare annually, the government contributes £2,000. For families with disabled children, the maximum doubles to £4,000 per year.

The scheme covers children from birth up to age 11 (or 16 for disabled children).

How much could you save?

Annual childcare spend	You pay	Government pays	Your saving
£5,000	£4,000	£1,000	£1,000/year
£10,000	£8,000	£2,000	£2,000/year
£15,000	£12,000	£2,000 (capped)	£2,000/year

The maximum government contribution is £500 per quarter (£2,000 per year) per child. If you spend less than £10,000 annually, you’ll save 20% of your actual childcare costs.

Use our Tax-Free Childcare Calculator to work out your exact savings based on your childcare costs.

Who is eligible?

To qualify for Tax-Free Childcare, you need to meet these criteria:

Parent requirements

• Both parents working (or a single parent working). If you have a partner, both of you must be in work — employed or self-employed.
• Minimum earnings: Each parent must earn at least the National Minimum Wage for 16 hours per week. For 2025/26, that’s £195/week or £10,158/year if you’re 21+ (lower thresholds for younger parents).
• Maximum earnings: Neither parent can earn more than £100,000 per year (adjusted net income).
• Immigration status: You must have a valid National Insurance number and be living in the UK.

Child requirements

• Under 12 years old (or under 17 if disabled)
• Usually living with you
• Not in foster care

Who doesn’t qualify?

You cannot claim Tax-Free Childcare if:

• Either parent earns over £100,000/year
• You’re claiming Universal Credit (you’d claim childcare costs through UC instead)
• You’re claiming tax credits (you’d claim through the childcare element)
• You’re using childcare vouchers from your employer (you must choose one or the other)

How to apply

1. Go to gov.uk/tax-free-childcare and click “Apply now”
2. Create a Government Gateway account if you don’t have one
3. Verify your identity — you’ll need your National Insurance number, a valid UK passport or driving licence
4. Confirm your employment details — HMRC checks your earnings automatically
5. Set up your childcare account — one per child
6. Add your childcare provider — they must be registered

Applications are usually approved within a few days. HMRC verifies your employment and earnings automatically.

Reconfirming every 3 months

You’ll need to reconfirm your eligibility every 3 months through your childcare account. If you don’t reconfirm, the government will stop adding top-ups. Set a calendar reminder — it takes less than 5 minutes.

How payments work

Once your account is set up:

1. You pay money into your childcare account (via bank transfer or debit card)
2. The government adds 20% automatically — within a few hours for most deposits
3. You pay your childcare provider directly from the account

Your childcare provider must be signed up to receive Tax-Free Childcare payments. Most nurseries, childminders, and registered providers accept them. Ask your provider if they’re registered, or search the Ofsted register to check.

Using Tax-Free Childcare with free hours

You can use Tax-Free Childcare alongside your free childcare entitlement:

• 15 hours universal (all 3-4 year olds in England)
• 30 hours extended (working parents of 3-4 year olds)
• 15 hours for eligible 2 year olds
• 15-30 hours for working parents of children 9 months to 2 years (from September 2025)

Use your free hours first, then pay for any additional hours through your Tax-Free Childcare account to get the 20% government top-up.

Both schemes are managed through the same government childcare account, so there’s only one login to deal with.

Check our Funding Eligibility Checker to see which free hours your child qualifies for.

Tax-Free Childcare vs other schemes

Scheme	Who it’s for	Saving
Tax-Free Childcare	Working parents earning under £100K	Up to £2,000/child/year
Universal Credit childcare	Parents on Universal Credit	Up to 85% of costs (max £1,031.88/month for 1 child, £1,768.94 for 2+)
Tax credits childcare	Parents on tax credits	Up to 70% of costs (max £175/week for 1 child)
Childcare vouchers	Existing scheme members only	Up to £933/year (basic rate taxpayer)

You can only use one scheme at a time. If you’re on Universal Credit or tax credits, claim childcare costs through those instead — they typically cover a higher percentage.

Tips to maximise your savings

• Pay in regularly rather than in lump sums. The government tops up each deposit, so consistent payments build up your balance.
• Don’t let the balance build up unused. The £2,000 cap resets each year — you can’t roll unused top-ups over.
• Both parents can contribute to the same child’s account.
• Reconfirm on time every 3 months. Late reconfirmation means missed top-ups.
• Check your provider is registered. Payments to unregistered providers won’t go through.

How to find nurseries that accept Tax-Free Childcare

Most registered nurseries accept Tax-Free Childcare payments. On Good Nurseries, you can search for nurseries near you and check their funding information in the listing details.

When you contact a nursery, ask:

• “Do you accept Tax-Free Childcare payments?”
• “Are you registered with HMRC to receive payments from childcare accounts?”

If a nursery isn’t registered yet, they can sign up at gov.uk/guidance/sign-up-to-tax-free-childcare-if-youre-a-childcare-provider.