School’s out, and for many working parents, the summer holidays bring extra pressure to find and fund childcare. But you might be missing out on support that could make a big difference. The UK government’s Tax-Free Childcare scheme offers working families up to £2,000 a year per child (or £4,000 if your child is disabled) to help cover the cost of childcare.
If you’re not sure whether you’re eligible, or how it works, we’ve broken it all down for you below.
Quick Facts: Tax-Free Childcare At A Glance
- Up to £2,000 per child, per year (£4,000 for disabled children)
- Covers registered nurseries, childminders, after-school clubs & holiday schemes
- For working parents earning at least £195/week (over 21s)
- Government pays £2 for every £8 you add
What is the Tax-Free Childcare Scheme?
The tax-free childcare scheme allows parents to get up to £500 every 3 months (up to £2,000 a year) for each of their children aged under 11 who meet specific criteria to help with the costs of childcare. If your child or children is/are disabled, you may be eligible for up to £1,000 every 3 months.
How Does the Tax-Free Childcare Scheme Work?
If you’re eligible (see full eligibility criteria below), the first thing you’ll need to do after applying is set up your online account. This online account is linked to your childcare provider, who must also be signed up for the scheme. For every £8 you pay into this account, the government will pay in £2 to use to pay your childcare provider.
What Does Tax-Free Childcare Cover?
The tax-free childcare scheme can be used to cover the costs of approved childcare, whether this is over the summer holidays or all year round. Examples of approved childcare include:
- Childminders, nurseries and nannies
- After-school clubs and play schemes
You will need to make sure your childcare provider is registered with the scheme – most are happy to help you get set up.
What is the Eligibility Criteria For Tax-Free Childcare?
The eligibility criteria for tax-free childcare depends on:
- Your employment
- Your income
- Your child’s age and circumstances
- Your immigration status
If You Work:
You may be eligible for tax-free childcare if you (and your partner, if you have one) are:
- Employed
- On sick or annual leave
- On shared parental, maternity, paternity or adoption leave and you’re going back to work within 31 days of the date you first applied
If You Don’t Work:
You may still be eligible if your partner is working and you receive any of the following:
- Incapacity Benefit
- Severe Disablement Allowance
- Carer’s Allowance or (in Scotland only) Carer Support Payment
- Contribution-based Employment and Support Allowance
You are still able to apply for tax-free childcare if you’re starting or re-starting work within the next 31 days.
Your Income:
Over the 3 months after you apply and are successful in your application, you and your partner (if you have one) must each expect to earn at least:
- £2,539 before tax if you’re aged 21 or over (this works out at £195 per week)
- £2,080 before tax if you’re aged 18-20 (£160 per week)
- £1,570 before tax if you’re under 18 or an apprentice (£120 per week)
You can use an average of how much you expect to earn over the current tax year if: you work throughout the year and don’t get paid regularly, or you’re self-employed and don’t expect to earn enough in the next 3 months.
Your Child’s Circumstances:
- 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 and usually lives with you, you may get up to £4,000 a year until 1st September after their 16th birthday. This will only be the case if you receive:
- Disability Living Allowance
- Personal Independence Payment
- Armed Forces Independent Payment
- Child Disability Payment (Scotland only)
- Adult Disability Payment (Scotland only)
- Or if your child is certified as blind or severely sight-impaired
Your Immigration Status:
You must have a National Insurance number and at least one of the following:
- British or Irish citizenship
- Settled or pre-settled status, or you have applied and you’re awaiting a decision
- Permission to access public funds – your UK residence card will tell you if you cannot do this
If you have a partner, they must have a National Insurance number too.
Find out more about eligibility criteria for the tax-free childcare scheme here.
How Do I Apply For Tax-Free Childcare?
You can apply online for tax-free childcare here.
You must include your partner (if you have one) in your application if you are:
- Married or in a civil partnership and live together
- Not married or in a civil partnership, but living together as though you are
You and your partner cannot both have accounts for the same child.
What If I’m Not Eligible For Tax-Free Childcare?
If you do not fit the criteria for tax-free childcare, there are other government schemes out there designed to help working families with children:
- Free education and childcare for 2-year-olds if you claim certain benefits
- 15 hours free childcare for 3 and 4-year-olds
- Free childcare for working parents
Tax-Free Childcare FAQs:
1. How long does it take to receive the 20% top-up on tax-free childcare?
Up to 24 hours after deposit.
2. Can both parents have tax-free childcare accounts for the same child?
No, only one account per child.
3. Does the tax-free childcare scheme affect benefits or Universal Credit?
Yes, you can’t claim both TFC and UC at the same time.
Struggling To Cover The Cost of The Summer Holidays, Even With the Government’s Help?
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