Tax free childcare is a new government scheme to help working parents with the cost of childcare.
Watch the HMRC video on what does Tax-Free Childcare look like and the myths surrounding it
Parents will be able to open an online account, which they can use to pay for childcare from a registered provider.
For every £8 a parent pays in, the government will pay in an extra £2. You can get up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the costs of childcare. This goes up to £1,000 every 3 months if a child is disabled (up to £4,000 a year).
Watch the DfE video on how to apply for 30 hours childcare and Tax-Free Childcare.
Your child must be 11 or under and usually live with you. They stop being eligible on 1 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’re eligible for this if they:
- get Disability Living Allowance, Personal Independence Payment, Armed Forces Independence Payment, Child Disability Payment (Scotland only) or Adult Disability Payment (Scotland only)
- are certified as blind or severely sight-impaired.
To qualify, parents will have to be in work, and each expecting to earn at least £120 a week. Each parent must not have income over £100,000 per year.
Your immigration status
To be eligible for Tax-Free Childcare, 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 waiting for 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.
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.
If you get tax credits, Universal Credit, a childcare bursary or grant, 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.
If you successfully apply for Tax-Free Childcare, your Working Tax Credit or Child Tax Credit will stop straight away. You cannot apply for them again.
You must tell your employer within 90 days of applying for Tax-Free Childcare to stop your childcare vouchers or directly contracted childcare.
They’ll then stop the vouchers or directly contracted childcare.
You may have to give HM Revenue and Customs (HMRC) evidence of leaving the childcare voucher scheme. For example, a copy of the letter telling your employer you’re leaving the childcare voucher scheme.
If you have a partner who gets vouchers or directly contracted childcare, they’ll need to tell their employer to stop this within 90 days too.
Wait until you get a decision on your Tax-Free Childcare application before cancelling your Universal Credit claim.
If you or your partner get a childcare bursary or grant or expect to do so within the next 3 months, you cannot get Tax-Free Childcare.
Tax free childcare scheme
Tax free childcare was introduced on 28 April 2017.
Parents will be able to apply for all their children at the same time, when their youngest child becomes eligible:
- visit the GOV.UK website for more information about the tax free childcare scheme and how to join
- visit the GOV.UK website for more information on the ten things parents should know about tax free childcare scheme.
What do I need to know if I’m a provider?
Childcare providers across the country are signing up for the government’s new tax-free childcare offer helping working parents with the cost of childcare.
Childcare providers must sign up to be able to receive payments from parents through the scheme. Visit the Government's Childcare Service portal to sign up to the scheme.
To sign up providers will need to provide:
- the unique code included in their invitation letter
- the bank account details for the account they wish to receive payments into
- their Unique Taxpayer Reference (UTR) number – or their National Insurance number, if they don’t have a UTR.
Its important providers sign up as soon as possible to be ready for the scheme’s launch.
Last updated: 23/01/2024 10:44