In June 2026, 602,000 UK families used Tax-Free Childcare for 745,000 children, with the government paying £55.7 million in top-ups (HMRC). The scheme adds £2 for every £8 parents pay in, up to £2,000 per child each year, or £4,000 for a disabled child.
TL;DR · LAST REVIEWED In June 2026, 602,000 UK families used Tax-Free Childcare for 745,000 children, with the government paying £55.7 million in top-ups (HMRC). The scheme adds £2 for every £8 parents pay in, up to £2,000 per child each year, or £4,000 for a disabled child.
- For every £8 you pay into a Tax-Free Childcare account the government adds £2, up to £2,000 per child a year (£4,000 for a disabled child).
- In June 2026, 601,620 families used Tax-Free Childcare for 745,460 children - the most since the scheme began.
- The government paid £55.7 million in top-ups in June 2026, below the £62.3 million peak of July 2024.
- Average top-up per family was £93 in June 2026, down from about £110 before the free-hours expansion began in April 2024.
- To qualify, each working parent must earn at least the minimum wage for 16 hours a week and less than £100,000 a year.
- Tax-Free Childcare can be used alongside the 15 or 30 hours of funded childcare in England, whose expansion has reduced reliance on top-ups.
| Nation or region | Families using TFC |
|---|---|
| South East | 97,175 |
| North West | 76,100 |
| East of England | 60,330 |
| London | 56,695 |
| South West | 56,335 |
| West Midlands | 52,180 |
| Yorkshire and The Humber | 51,195 |
| East Midlands | 49,305 |
| Scotland | 37,145 |
| Wales | 21,910 |
| North East | 19,165 |
| Northern Ireland | 17,200 |
| England | 518,485 |
| United Kingdom | 601,620 |
KEY FACTS
- For every £8 you pay into a Tax-Free Childcare account the government adds £2, up to £2,000 per child a year (£4,000 for a disabled child).
- In June 2026, 601,620 families used Tax-Free Childcare for 745,460 children - the most since the scheme began.
- The government paid £55.7 million in top-ups in June 2026, below the £62.3 million peak of July 2024.
- Average top-up per family was £93 in June 2026, down from about £110 before the free-hours expansion began in April 2024.
- To qualify, each working parent must earn at least the minimum wage for 16 hours a week and less than £100,000 a year.
- Tax-Free Childcare can be used alongside the 15 or 30 hours of funded childcare in England, whose expansion has reduced reliance on top-ups.
What Tax-Free Childcare Is
Tax-Free Childcare is a government top-up scheme run by HMRC that adds £2 for every £8 working parents pay into an online childcare account, up to £2,000 per child a year, or £4,000 for a disabled child. The money can only be used to pay Ofsted-registered or approved childcare providers.
The scheme works as a straightforward savings account for childcare costs. Parents deposit money into the account, and the government adds the 25 per cent top-up automatically. For example, a parent paying in £80 would receive an additional £20 from the government, making £100 available for childcare. The maximum annual top-up of £2,000 per child means parents can deposit up to £8,000 each year to receive the full benefit.
For families with a disabled child, the limits double. Parents can receive up to £4,000 in top-ups each year, meaning they can deposit up to £16,000. The scheme has been running since 2017 and is administered by HMRC through the Childcare Choices service on GOV.UK.
In June 2026, 601,620 families used Tax-Free Childcare for 745,460 children, the highest number since the scheme began. The government paid £55.7 million in top-ups that month, below the £62.3 million peak recorded in July 2024. The average top-up per family was £93 in June 2026, down from about £110 before the free-hours expansion began in April 2024.
Who Is Eligible
Both parents, or a single parent, must be working and each earning at least the national minimum or living wage for 16 hours a week. Each parent must also earn less than £100,000 a year, and the child must be aged 11 or under, or under 17 if disabled.
The eligibility rules apply to each parent individually. If one parent earns below the minimum wage threshold for 16 hours, or above £100,000, the family cannot use the scheme. For couples, both parents must meet the earnings criteria, even if only one parent pays for childcare. The earnings test is based on expected income for the current tax year, not previous years.
Self-employed parents are eligible provided they meet the same earnings thresholds. Parents on maternity, paternity or adoption leave are treated as working during that period, as are those on sick leave or annual leave. Parents who are unable to work due to a disability may also qualify.
The child must be aged 11 or under at the time of application. For disabled children, the age limit rises to 16, meaning parents can claim until the child turns 17. Parents must reconfirm their eligibility every three months to continue receiving the top-up. If circumstances change, such as a parent losing their job or starting to earn above £100,000, the family must notify HMRC.
How to Open and Use an Account
Apply through the government's Childcare Choices service on GOV.UK, pay money into the account, and the top-up is added automatically. You then pay approved childcare providers from the account, and you must reconfirm your details every three months to keep the top-up.
The application process requires a Government Gateway account and details for both parents, including National Insurance numbers and income information. HMRC checks eligibility against tax records and confirms the child's details. Once approved, the account is opened online and parents can begin depositing money immediately.
Payments into the account can be made by debit card or bank transfer. The government top-up is added within a few working days of the deposit. Parents can then use the funds to pay registered childcare providers, including nurseries, childminders, after-school clubs and holiday schemes. The provider must be signed up to the scheme and will receive payment directly from the account.
Reconfirmation is required every three months. HMRC sends a reminder, and parents must log in to confirm their circumstances have not changed. If they fail to reconfirm, the top-up stops until they do. Parents can withdraw money from the account at any time, but the government top-up must be returned if it has not been spent on childcare.
How It Works with the 15 and 30 Free Hours
In England, you can use Tax-Free Childcare alongside the funded 15 or 30 hours of childcare. The September 2025 expansion of 30 funded hours has reduced how much top-up families need, but you cannot combine Tax-Free Childcare with childcare vouchers or Universal Credit childcare support.
The funded hours scheme provides free childcare for eligible families in England. The 15 hours are available for all three and four year olds, and some two year olds. The 30 hours are available to working families meeting the same earnings criteria as Tax-Free Childcare. The September 2025 expansion extended the 30 hours to more children, reducing the amount of paid childcare many families require.
Tax-Free Childcare can be used to pay for any hours not covered by the funded entitlement. For example, a family using 30 funded hours per week during term time may still need to pay for additional hours, meals or activities. These costs can be paid through the Tax-Free Childcare account, with the government top-up applied.
The expansion of funded hours has reduced reliance on Tax-Free Childcare top-ups. The average top-up per family fell from about £110 before April 2024 to £93 in June 2026. However, families cannot use Tax-Free Childcare at the same time as childcare vouchers or Universal Credit childcare support. They must choose one scheme, and the choice depends on their circumstances and childcare costs.
Is It Worth It
The 25 per cent top-up is most valuable for families with childcare bills up to £8,000 per child. Compare it against Universal Credit childcare and any remaining childcare vouchers before choosing which scheme to use.
For a family paying £8,000 a year in childcare for one child, Tax-Free Childcare provides £2,000 in government support. For families with higher bills, the top-up is capped, so the effective rate falls. For example, a family paying £10,000 a year would still receive only £2,000, an effective rate of 20 per cent.
Universal Credit childcare support can cover up to 85 per cent of childcare costs for eligible families, which may be more generous than the 25 per cent top-up. However, Universal Credit is means-tested and depends on household income and circumstances. Families already receiving Universal Credit cannot use Tax-Free Childcare at the same time.
Childcare vouchers, where still available through an employer, offer tax and National Insurance savings. However, the scheme is closed to new entrants, and existing users may find Tax-Free Childcare offers a higher level of support. The choice between schemes depends on individual circumstances, including income, childcare costs and whether the family receives other benefits.
The value of Tax-Free Childcare also depends on how much paid childcare a family needs. With the expansion of funded hours, some families may find their childcare bills are low enough that the top-up is minimal. Families should calculate their expected childcare costs and compare the support available under each scheme before deciding.
How much you can get
Tax-Free Childcare tops up what you pay by 25%: for every £8 you pay in, the government adds £2. You can get up to £500 every three months (£2,000 a year) per child, or £1,000 a quarter (£4,000 a year) for a disabled child.
| Child | Max you pay in | Max government top-up | Per quarter |
|---|---|---|---|
| Each child | £8,000 | £2,000 a year | £500 |
| Disabled child | £16,000 | £4,000 a year | £1,000 |
Tax-Free Childcare statistics: the latest HMRC data
In June 2026, 601,620 families used Tax-Free Childcare accounts for 745,460 children, the highest since the scheme launched in 2017. Usage dipped in April and May before rising again in June, and has broadly levelled off since the September 2025 expansion of funded childcare in England.
The government paid £55.7 million in top-ups in June 2026, similar to the £57.7 million paid in June 2025 but below the £62.3 million peak of July 2024. Average top-up per family was £85 in April, £82 in May and £93 in June, down from about £110 before the free-hours expansion began, as funded hours have substituted for some top-up spending.
Which children the scheme reaches
Use is concentrated among the youngest children: in June 2026 the largest groups were aged one, two and three. Usage for children aged three and four rose over the quarter, and for those aged five and over reached its highest level since the scheme began.
Tax-Free Childcare by nation and region
The South East had the most families using Tax-Free Childcare (97,175), followed by the North West and London. England accounted for 518,485 of the 601,620 UK total.
DISCLAIMER
This article is editorial information, not financial advice. Kael Tripton Ltd is not authorised or regulated by the Financial Conduct Authority. Figures were correct at the last review date shown above; verify current rates and rules with the primary sources listed below before acting.
Frequently asked questions
How does Tax-Free Childcare work?
For every £8 you pay into a childcare account the government adds £2, up to £2,000 per child a year (£4,000 for a disabled child). You then pay approved childcare providers from the account.
Who is eligible for Tax-Free Childcare?
Working parents where each earns at least the minimum wage for 16 hours a week and under £100,000 a year, with a child aged 11 or under (or under 17 if disabled).
How many families use Tax-Free Childcare?
601,620 families used it for 745,460 children in June 2026, the most since the scheme began in 2017.
Can I use Tax-Free Childcare and the 30 free hours together?
Yes. You can use Tax-Free Childcare alongside the 15 or 30 hours of funded childcare in England, though you cannot use it at the same time as childcare vouchers or Universal Credit childcare support.
How do I open a Tax-Free Childcare account?
Apply through the government's Childcare Choices service on GOV.UK, then reconfirm your details every three months to keep receiving the top-up.
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