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Tax-Free Childcare

1. Help with Childcare Costs 2. Tax Free Childcare

2. Tax Free childcare

Tax-Free Childcare is has been introduced to offer working families 20% support towards qualifying childcare costs.  For every £8 you pay into your childcare online account the government will pay £2.  The government will put a maximum of £500 or £1,000 if your child has a disability every three months (£2,000 a year).

Your online Childcare account is where you will pay your childcare costs and the government will 'top-up' the account with their contribution.  If you have other people that help with childcare costs such as grandparents or other family members, they can pay into the account as well.  The Childcare Provider is then paid directly from this account. 

You can build up credit for use when you need it for example during school holidays.  There is not extra fees in wanting to do this.  If you no longer need to pay into the account due to circumstances changing, you can withdraw the money.  The amount you withdraw the government will withdraw their contribution. 

You can normally get Tax-Free Childcare if you (and your partner) are:

  • In work or getting maternity, paternity leave, sick leave and annual leave;
  • Both earning at least the National Minimum Wage or Living Wage for 16 hours a week (this is at least £125 if you're over 25);
  • Earning less then £100,000 a year taxable income

If you are self-employed and started your business less then 12 months ago, the earnings limit does not apply to you.

Your Child

Children stop being eligible for this on the the 1st September after their 11th birthday and they have to be living you.  If you don't have a partner but you are jointly responsible for a child, you will have to agree who should apply as only one person can open a Tax-free Childcare account. 

If your child is Adopted they are till eligible for the Tax-Free Childcare but foster children are not. 

If your child is disabled they may get up to £1,000 every three months, up to £4,000 a year until they are 17.  They are eligible if they:

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


Your Childcare provider

When choosing your Childcare Provider you must make sure they are signed up to the scheme before you can pay them.

If you are claiming Working tax Credit, Child Tax Credit, Universal Credit or Childcare Vouchers, you can not get Tax-Free Childcare at the same time.


How to apply?

To apply for Tax-Free Childcare, you will need your (and your partner's if applicable):

  • National Insurance number;
  • Unique Taxpayer Reference (UTR), if you're self-employed

The application takes approximately 20 minutes.  As part of the application, you will find out if you are eligible for both Tax-Free Childcare and 30 hours free childcare.  Some people find this out straight away but it can also take up to 7 days.  You can make a payment the day after you put money into the account.  It normally takes 3 working days for the childcare provider receive the money. 

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