| Tax-Free Childcare 2026 — Key Figures | |
|---|---|
| Government top-up | 20p for every 80p you pay in — effectively 20% off childcare |
| Maximum per child/year | £2,000 (£4,000 for disabled children) |
| Maximum per child/quarter | £500 (£1,000 for disabled children) |
| Eligible age | Up to 11 (up to 17 for disabled children) |
| Income condition | Each parent must earn at least £1,909/quarter; max £100k/year adjusted net income |
| Cannot combine with | Childcare Vouchers, Universal Credit childcare element, or Tax Credits childcare |
Tax-Free Childcare (TFC) is a government scheme that adds 20p for every 80p you deposit into a childcare account, up to a maximum government contribution of £2,000 per child per year (£4,000 for disabled children). It is administered through National Savings and Investments (NS&I) via the Childcare Service at childcare.service.gov.uk. Despite being available since 2017, HMRC estimates that around half of eligible families do not use it.
How the Top-Up Works
You open a Tax-Free Childcare account on the government Childcare Service. For every £8 you pay in, the government adds £2 — making £10 to spend with your childcare provider. The top-up is applied automatically when you deposit. You can deposit up to £10,000 per child per year (receiving £2,000 government top-up), or up to £20,000 for a disabled child (receiving £4,000). Deposits can be made at any time and in any amount — there is no requirement to pay in monthly. Unused funds roll over and the account stays open until the child reaches the eligible age.
| 💡 Tip: Deposit in full at the start of the quarter to maximise the £500 quarterly cap. If you deposit £2,000 in one go you receive the full £500 top-up immediately rather than spreading it. |
Eligibility Rules
Both parents must meet all of the following simultaneously (for single parents, only one set applies):
| Condition | Detail | Common trap |
|---|---|---|
| Minimum earnings | Each parent earns at least £1,909/quarter (NMW x 16hrs/week) | Parent on parental leave with zero pay fails this |
| Maximum earnings | Neither parent has adjusted net income over £100,000/year | Pension contributions reduce adjusted net income — high earners can use this |
| No other support | Cannot combine with Tax Credits childcare or UC childcare element | Switching from UC to TFC can leave families worse off |
| Child age | Child must be under 11 (or under 17 if disabled) | 1 September after 11th birthday is the cut-off |
| Approved provider | Provider must be OFSTED-registered | Informal childminders not registered with OFSTED cannot accept TFC |
Tax-Free Childcare vs Universal Credit Childcare
These two schemes cannot be combined. Universal Credit childcare covers 85% of eligible childcare costs (up to £1,014.63/month for one child, £1,739.37 for two or more in 2026/27). For families on UC, the UC childcare element is almost always more valuable than TFC. Use the government childcare calculator at childcarechoices.gov.uk before switching. (Source: HMRC Tax-Free Childcare guidance)
| Household income | Better scheme | Reason |
|---|---|---|
| Under £40k (on UC) | Universal Credit childcare (85% subsidy) | UC covers 85% vs TFC 20% |
| £40k-£100k (not on UC) | Tax-Free Childcare | Not eligible for UC; TFC gives 20% off |
| Over £100k (one parent) | Neither (ineligible for both) | Salary sacrifice vouchers may still apply via employer |
30 Hours Free Childcare — Stacking with TFC
From September 2024 the government expanded funded childcare hours to 15 hours/week for children aged 9 months to 2 years (working parents), rising to 30 hours/week for 3 to 4 year olds. Tax-Free Childcare CAN be used alongside the free hours entitlement — you use TFC to top up costs above the funded hours, or to pay for extras such as meals, activities and holiday clubs. (Source: DfE childcare expansion guidance)
How to Apply
Apply at childcare.service.gov.uk using your Government Gateway login. You will need your National Insurance number, employer details or self-employed tax reference, and your child's details including date of birth. You must reconfirm eligibility every 3 months. Failing to reconfirm pauses top-ups until you do so. (Source: HMRC Childcare Service)
Self-Employed Parents
Self-employed parents can claim TFC. The minimum earnings test uses a quarterly average: if you expect to earn at least £1,909 in the quarter you are eligible. HMRC applies a grace period for new self-employed parents in their first year — the minimum earnings test is waived for one quarter. If your income fluctuates, you can apply in qualifying quarters and pause in others. (Source: HMRC TFC eligibility guidance)
Childcare Types Covered
| Childcare type | Covered by TFC? | Notes |
|---|---|---|
| Nursery (OFSTED-registered) | Yes | Must be registered |
| Childminder (OFSTED-registered) | Yes | Must be registered |
| After-school clubs | Yes | If OFSTED-registered |
| Holiday clubs | Yes | If OFSTED-registered |
| Nanny (OFSTED-registered individually) | Yes | Nanny must be registered, not just the agency |
| Au pair or informal carer | No | Not OFSTED-registered |
| School breakfast/after-school clubs | Yes | Schools are automatically approved providers |
| Disclaimer: This article is for information only and does not constitute financial, legal or tax advice. Figures correct at date of publication but subject to change. Always verify with primary sources (gov.uk, HMRC, FCA register) and consult a qualified adviser before making financial decisions. |
Frequently Asked Questions
Can I use Tax-Free Childcare if I am on maternity leave?
If you are on statutory maternity, paternity or adoption leave, you are treated as meeting the minimum earnings test for that period. You can continue to use TFC during leave as long as your partner meets the income conditions. The account stays open. (Source: HMRC TFC guidance)
What happens if I accidentally exceed £100,000 income?
You must notify HMRC and close the TFC account. Top-ups already received do not need to be repaid for the current quarter. If income drops below £100,000 in future you can reapply.
Can I withdraw money from the TFC account?
Yes — you can withdraw money you deposited. However, the government top-up element can only be used for OFSTED-registered childcare. Withdrawing top-up funds for non-childcare purposes requires repayment of the government contribution.
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