Tax-Free Childcare

You pay into an online childcare account and the government adds £2 for every £8 you put in. The top-up is capped at £500 a quarter per child, which is £2,000 a year, or £1,000 a quarter (£4,000 a year) for a disabled child. The scheme covers children aged 11 or under, or up to 16 if disabled, and the money goes to registered providers such as nurseries, childminders, breakfast and after-school clubs and holiday schemes.

How the top-up works

For every £8 you pay in, the government pays £2, so £10 reaches your provider. To get the full £500 top-up in a quarter you would pay in £2,000, giving £2,500 for childcare. Across a year that is £8,000 from you and £2,000 from the government for each child.

Child	Top-up per quarter	Top-up per year	You pay in to reach the cap (year)
Not disabled, 11 or under	£500	£2,000	£8,000
Disabled, 16 or under	£1,000	£4,000	£16,000

You can pay in at any time and as often as you like, and money can sit in the account until you need it. School support staff and teachers, whose childcare costs peak in the holidays, tend to find that useful.

Who qualifies

Each parent in the household must normally be working and expect to earn at least the equivalent of 16 hours a week at the National Minimum Wage or National Living Wage over the next three months. For someone aged 21 or over in 2026/27 that is £2,643.68 a quarter. Self-employed people, those on sick, maternity, paternity or adoption leave, and some carers can still qualify, and gov.uk lists the circumstances.

Neither parent can have adjusted net income over £100,000 a year. That figure is taxable income minus certain deductions, including pension contributions, so a public sector employee earning slightly over £100,000 may come back under the limit through their pension. The £100,000 tax trap covers adjusted net income in more detail.

Your details need reconfirming every three months through your childcare account, and payments stop until you do if you miss the deadline.

Other childcare help

Tax-Free Childcare cannot be combined with Universal Credit, tax credits or childcare vouchers. It can sit alongside the funded childcare hours in England, for example to pay for extra hours or for meals and activities the funded offer does not cover. The same earnings and £100,000 tests apply to the 30 funded hours for working parents.

Help	Who it suits	Main limit
Tax-Free Childcare	Working parents not on Universal Credit	£2,000 top-up a year per child
Funded hours, England	Working parents of children from 9 months to school age	30 hours a week for 38 weeks
Universal Credit childcare element	Working households claiming Universal Credit	A share of costs up to a monthly cap

Families choosing between Universal Credit and Tax-Free Childcare should compare the two carefully. The Universal Credit childcare element covers a much larger share of costs, but only if you qualify for Universal Credit. Universal Credit while working explains how earnings affect it, and gov.uk has a childcare calculator that compares the options for your household.

Funded childcare hours in England covers the free hours in detail. Scotland, Wales and Northern Ireland have their own funded offers, while Tax-Free Childcare applies across the UK.

How to apply

Applications are online through gov.uk with your government sign-in. Have your National Insurance number, details of your employment and earnings, and your child’s birth certificate details to hand, plus your partner’s if you have one.

Once approved, you get an account for each child and link your childcare provider using the reference they give you. Providers must be registered (with Ofsted in England, for example) and signed up to receive payments.

Processing takes some time, so apply before the first bill. For a child starting with a new provider in September, an application in the summer leaves time to pay in before the first invoice.

Public sector extras

Many NHS trusts, councils and schools also run their own childcare help: workplace nurseries, salary sacrifice nursery schemes or holiday clubs. Some of these cannot be used alongside Tax-Free Childcare, so check the rules before signing up. Childcare help for public sector workers lists the common arrangements.

On unpaid leave, a career break or a zero-hours bank contract, check the earnings test carefully. It looks at what you expect to earn over the next three months, whatever your contract says. Problems with an application or a reconfirmation go to the Childcare Service, which HMRC runs.