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Tax-Free Childcare

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Childcare Choices Tax-Free Childcare

Tax-Free Childcare is a Government scheme to help with the cost of childcare. Parents can open an online childcare account which you can pay into to cover the cost of childcare with a registered provider and the government will add to the account.

Apply For Tax-Free Childcare

How does it work?

  • You create an online account – just like a bank account – which you use to pay for registered childcare.
  • For every 80p you or someone else pays in the governement will top up an extra 20p (this is equivalent of the tax most people pay -20%)
  • You could get a Government contribution of up to £2,000 per child, per year, or £4,000 for disabled children, to go towards your childcare costs.
  • You and others (grandparents, other family members etc) can pay money into the childcare account as and when you like, giving you the flexibility to pay more in some months and less at other times. 
  • You’ll be able to withdraw money from the account if you want to. If your circumstances change or you no longer want to pay into the account, then you’ll be able to withdraw the money you have built up. If you do, the government will withdraw its corresponding contribution.

How do I find out if I'm eligible?

You can usually get Tax-Free Childcare if you (and your partner, if you have one) are:

  • in work - or getting parental leave, sick leave or annual leave
  • each earning at least the National Minimum Wage or Living Wage for 16 hours a week - this is £125.28 if you’re 25 or over

This earnings limit does not apply if you’re self-employed and started your business less than 12 months ago.

You’re not eligible if:

  • your child does not usually live with you
  • the child is your foster child
  • either you or your partner has a taxable income over £100,000

If you’re not currently working

You can apply if you’re starting or re-starting work within the next 31 days.

If you’re on parental leave, you cannot apply for the child you’re on leave for.

You may still be eligible if your partner is working, and you get Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance or Employment and Support Allowance.

Coronavirus

If your working pattern has changed because of coronavirus (COVID-19)

You may still be eligible for Tax-Free Childcare if you’re temporarily working less and either:

  • you’re on furlough through the Coronavirus Job Retention Scheme
  • you’re claiming a Self Employment Income Support Scheme grant

Your child

Your child must be 11 or under and usually live with you. They stop being eligible on 1st September after their 11th birthday.

Adopted children are eligible, but foster children are not.

If your child is disabled you may get up to £4,000 a year until they’re 17. They are eligible for this if they:

  • get Disability Living Allowance, Personal Independence Payment or Armed Forces Independence Payment
  • are registered as blind or severely sight-impaired

If you get tax credits, Universal Credit or childcare vouchers

You cannot get Tax-Free Childcare at the same time as claiming Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers.

Which scheme you’re better off with depends on your situation. Use the childcare calculator to work out which type of support is best for you.

Childcare Choices eligibility checker

You can find out more and check your eligibility for Tax Free Childcare (TFC) (and all other government schemes) via the Childcare Choices 

Childcare Choices allows you to:

  •     check your eligibility for each of the childcare schemes
  •     find out more about each scheme
  •     sign up for a scheme or register for email alerts
  •     find out what you need to do next

If you are eligible for Tax Free Childcare, you can start depositing funds into your account to receive the government top up and arrange payments to your registered childcare providers.

The website allows you to select how much you earn, followed by whether or not you live with a partner. You will then be presented with your options highlighted in yellow (schemes you do not quality for will be greyed out). Under each available option you will see: “Is it for me?”. Selecting this will display further details and direct you to the relevant place such as online registration, calculators, email alerts, or GOV.UK pages.

Immigration Status

Your immigration status

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
  • permission to access public funds - your UK residence card will tell you if you cannot do this

If you’re living in an EU country, Switzerland, Norway, Iceland or Liechtenstein, you (or your partner if you have one) might still be eligible for Tax-Free Childcare if:

  • your work is in the UK
  • the work started before 1 January 2021
  • you’ve worked in the UK at least once every 12 months since you started working here

This is known as being a frontier worker. You must show your Frontier Worker permit to the Childcare Service when you apply for Tax-Free Childcare.