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Tax-Free Childcare?

What is Tax-Free Childcare?

The Tax‑Free Childcare (TFC) is a UK government scheme designed to help working families with the costs of registered childcare. You can get up to £500 every 3 months for each of your children to help with the costs of childcare.

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  • For every £8 you pay in, the government adds £2.
  • The maximum you can receive is up to £2,000 per child per year, or up to £4,000 if your child is disabled.
  • ‍The funds in the account can then be used to pay your childcare provider directly.

Why use it?

If you’re working and paying for childcare (nursery, childminder, after-school club, holiday club etc.) then TFC can reduce your direct cost of childcare. It’s especially useful because it applies even if you’re self-employed, and you control the account rather than your employer.

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Am I eligible?

Below are the main eligibility criteria. Note: you’ll still want to check the most up-to-date guidance on the official Government website.

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You (and your partner if you have one) must:

  • Be aged 16 or over at the date of the declaration.
  • Be working (employed or self-employed) in “qualifying paid work”. This includes being on maternity/paternity/shared parental/adoption/sick leave, if you intend to return to work.
  • Each expect to earn at least the weekly equivalent of 16 hours at the National Minimum or Living Wage over the next three months. If you’re self-employed and in your first 12 months of trading, you can still qualify even if you do not yet meet this earnings threshold.
  • You cannot get Tax-Free Childcare if you (or your partner) expect to have an adjusted net income of £100,000 or more in the current tax year.
  • You must have a National Insurance number and live in the UK. You can qualify if you are a British or Irish citizen, have settled or pre-settled status under the EU Settlement Scheme, or have permission to access public funds (such as a frontier worker permit or other eligible visa).
  • You cannot use Tax-Free Childcare at the same time as receiving childcare support through Universal Credit, tax credits with a childcare element, childcare vouchers, or directly-contracted employer childcare.
  • Not be using childcare vouchers or directly-contracted employer-childcare support alongside TFC.

Child eligibility:

  • The child must usually live with you.
  • The child must be under 11 years old (i.e., eligible until the 1 September following their 11th birthday) in most cases.
  • If your child is disabled (and meets the disability criteria) they remain eligible until the 1 September after their 16th birthday, and you can receive up to £4,000 per year.
  • Only one account can be opened for each child — you and your partner cannot both open separate accounts for the same child.

Additional notes:

  • If you are not currently working, you may still qualify if your partner is working and you are receiving certain benefits (e.g., Carer’s Allowance, certain Employment & Support Allowance) or credits.
  • Your childcare provider must be registered or approved with the appropriate authority and registered to accept Tax-Free Childcare payments through the HMRC system. Check with your provider before you apply.

How to apply

  1. Go to the official application service: Apply for Tax-Free Childcare
  2. You (and your partner, if you have one) will need your National Insurance number(s), your Unique Taxpayer Reference (UTR) if self-employed, and your child’s birth certificate number (if you have it). You may also need to confirm your employment start date and expected earnings.
  3. Once your application is approved you’ll get a Tax-Free Childcare account. You pay money in and get a 20% government top-up (up to £500 every 3 months, or £1,000 if your child is disabled). You can then pay your registered provider directly from that account (or via PonchoPay) — payments usually reach the provider within 24 hours.
  4. You must reconfirm your details (income, work and household circumstances) every three months to keep getting Tax-Free Childcare. If you miss the deadline, your government top-up payments will stop until you reconfirm. Changes in circumstances may affect your entitlement or require repayment of top-ups.

Things to check / consider

  • Even if you’re eligible, it may or may not be better than other childcare support schemes (such as employer-childcare vouchers, free early education hours, etc.). Use the government’s Childcare Calculator to compare.
  • If you or your partner earn £100,000 or more in adjusted net income, you will not be eligible for TFC.
  • If you previously claimed the older childcare vouchers scheme, or you (or your partner) are receiving Universal Credit with a childcare element, you may need to exit those schemes before using TFC.
  • If you leave the scheme or circumstances change (for example your earnings drop, you stop working, your partner changes work status), you may have to repay some or all of the government top-up. It’s essential to keep your details up-to-date.
  • Although the funds in the account are for childcare, the provider must be registered/approved and signed up to accept payments via the TFC account. Some smaller providers may not yet be registered – check with them.

Eligible childcare types

Funds from your account can typically be used for a wide range of registered childcare services including:

  • Nurseries, pre-schools, childminders
  • Before or after school clubs
  • Holiday clubs
  • Other approved childcare providers who are registered and accepted by HMRC.

Useful links

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