Tax-free childcare is a government initiative designed to assist working parents with childcare expenses. Eligible participants can receive up to £2,000 per year per child, covering costs such as nurseries, childminders, and after-school clubs. Despite its availability to approximately 1.3 million working families, around 800,000 eligible families are not currently benefiting from this support. The scheme is accessible across the UK, including England, Scotland, Wales, and Northern Ireland. To determine if Tax-Free Childcare is suitable for you and to estimate potential savings, it’s essential to evaluate your eligibility based on your employment status, income, and your child’s age and circumstances.

However, not everyone qualifies for the scheme, as eligibility depends on various factors such as working status, income, and the child’s age and situation. Additionally, if you are already receiving childcare assistance through universal credit or tax credits, enrolling in Tax-Free Childcare may lead to the loss of your current benefits. Therefore, it’s crucial to confirm your eligibility for universal credit or tax credits before considering Tax-Free Childcare. If you are already receiving childcare support through these programs, you may not be eligible for the Tax-Free Childcare scheme.

Do I qualify for tax-free childcare?

How does your employment status impact your eligibility?

If you and your partner (if you have one) are both working including if you are self-employed then you will qualify, if you are not working then there are some circumstances where you would still be eligible, these include:


■  On sick or annual leave

■  On shared parental, maternity, paternity, or adoption leave (if you are on adoption leave you cannot apply for the child you are on leave for, unless going back to work within 31 days of the date you applied)


If you are not currently working but your partner is, you may still be eligible if you receive benefits such as incapacity benefit, carers allowance, or severe disablement allowance.


Your partner does not have to be the other parent to qualify, it is all down to who you live with. Therefore, if you are a single parent and your new partner then moves in but does not meet the criteria, you will no longer be able to claim tax-free childcare.

How does your income impact your eligibility?

You (and your partner if you have one) need to both be working and earning a minimum of £152 a week this is at least the National Minimum Wage or Living Wage for 16 hours a week on average.

You both also must earn less than £100,000 a year.

What qualifies your child?

To qualify, your child must be 11 or under and live with you, they will stop being eligible for the scheme on 1st September after their 11th birthday.

If your child is disabled, then they may be eligible to get up to £4,000 a year until they turn 17 if they:

■ Receive disability living allowance, Child disability payment (Scotland), Personal independence payment, or Armed Forces Independence payment.

■ Are severely sight impaired or certified as blind.



If you qualify for the scheme, you can establish an online account for your child through the government’s tax-free childcare website, which you’ll utilize to remit payments to the childcare provider. Setting up the account typically requires about 20 minutes, and you’ll need your national insurance number to complete the process. Additionally, if you meet the eligibility criteria, you can access both tax-free childcare and 30 hours of free childcare.

How can I proceed with making a payment?

You can deposit funds into the account by setting up a standing order or using your debit card from your bank account. Family members like grandparents and friends can also make contributions. However, it’s not possible to deposit funds via direct debit.

For every £8 deposited into the account, the government will contribute an additional £2 directly to your childcare provider, typically on the same day you make the deposit. To determine the total amount, add 20% to the deposited sum. For instance, if you deposit £500 into the Tax-Free Childcare account, the government will contribute an extra £125, resulting in a total of £625 payable to your provider.

How frequently do you need to verify your details?

You need to ensure your details are current every three months to maintain eligibility for tax-free childcare. This process is simple and fast, and you’ll receive reminders when it’s time to reconfirm, or you can check by logging into your account. Failing to reconfirm by the deadline means you’ll have to pay the full childcare amount without the government’s top-up, potentially missing out on benefits.