Tax-Free Childcare
Last reviewed: June 2023
Tax-Free Childcare
You can get up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the costs of childcare. This goes up to £1,000 every 3 months if a child is disabled (up to £4,000 a year).
- For working families, including the self-employed, in the UK
- Earning under £100k and at least £167 per week (equal to 16 hours at the National Minimum or Living Wage) each
- Who aren't receiving Tax Credits, Universal Credit or childcare vouchers
- With children aged 0-11 (or 0-16 if disabled)
- For every £8 you pay into an online account, the government will add an extra £2, up to £2,000 per child per year
What you can use Tax-Free Childcare for
You can use it to pay for approved childcare, for example:
- childminders, nurseries and nannies
- after school clubs and play schemes
Your childcare provider must be signed up to the scheme before you can pay them and benefit from Tax-Free Childcare.
For further details and to apply, please visit: https://www.gov.uk/tax-free-childcare
Please note:
- You are not entitled to Universal Credit or Tax Credits and Tax-Free Childcare at the same time.
- If you apply for Tax-Free Childcare, your tax credit claim will end and you will not be able to claim again.
- If you are awarded Tax-Free Childcare and you receive Universal Credit, you must contact Universal Credit to end your claim, so that you are not overpaid.
- Seek professional advice to find out which childcare funding is best for you.
How does it work?
For parents:
Parents could get a Government contribution of up to £2,000 per child, per year, or £4,000 if your child is disabled, to go towards their childcare costs.
Parents will have an online account – just like a bank account – which they can use to pay childcare professionals. They’ll be able to track how much they’ve paid in and how much they’ve spent for each child. The top up will be added into the account on the same day, and the total amount will be available to pay for childcare.
For childcare professionals:
You can sign up for Tax-Free Childcare, allowing parents to pay directly to your bank account. Parents in Tax-Free Childcare should find it works in the same way and at the same speed as making a payment via an online bank account.
Each child will have a unique reference number, so you’ll be able to identify which payments cover which children.
Who is eligible?
Parents could be eligible for Tax-Free Childcare if they:
- Are both working (or on parental leave, sick leave or annual leave)
-
Over the next 3 months you and your partner (if you have one) must each expect to earn at least:
- £1,976 if you’re aged 23 or over
- £1,909 if you’re aged 21 or 22
- £1,420 if you’re aged 18 to 20
- £1,000 if you’re under 18 or an apprentice
This is at least the National Minimum Wage or Living Wage for 16 hours a week on average.
You can use an average of how much you expect to earn over the current tax year if:
- you work throughout the year but do not get paid regularly
- you’re self-employed and do not expect to earn enough in the next 3 months
- Each earn no more than £100,000 per year
- If you’re not currently working, you may still be eligible if your partner is working, and you get Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or contribution-based Employment and Support Allowance
- You can apply if you’re starting or re-starting work within the next 31 days.
To be eligible for Tax-Free Childcare, you (or your partner if you have one) must have a National Insurance number and at least one of the following:
- British or Irish citizenship
- Settled or pre-settled status or been living in the UK before 1 January 2021 with the right to reside
- permission to access public funds
What age does my child have to be to qualify?
- Your child must be 11 or under and usually live with you. They stop being eligible on 1 September after their 11th birthday.
- Adopted children are eligible, but foster children are not.
If your child is disabled and usually lives with you, you may get up to £4,000 a year until 1 September after their 16th birthday. They’re eligible for this if they:
- get Disability Living Allowance, Personal Independence Payment, Armed Forces Independence Payment, Child Disability Payment (Scotland only) or Adult Disability Payment (Scotland only)
- are certified as blind or severely sight-impaired
How do parents sign up?
Open an online account, which you can pay into to cover the cost of childcare with a registered provider. This will be through the government website www.childcarechoices.gov.uk
Any problems with applying for tax free childcare or an account please phone the Childcare Service Helpline on 0300 123 4097.
How do childcare providers sign up?
Childcare providers should have received a letter from the Government containing a unique ID to start the online registration process. Once in the secure site:
- confirms your unique taxpayer reference (UTR) number;
- the HMRC reference number on HMRC communications or on the Personal Tax Account; and
- provides bank details for the account you wish to receive Tax-Free Childcare payments into.
For updates see the official government information Tax-Free Childcare and Tax-Free Childcare Support.