How does the Tax-Free Childcare account work in 2026?

Full answer

Tax-Free Childcare (TFC) is a government scheme that tops up money parents pay into an online childcare account, which is then used to pay registered childcare providers. **How the top-up works** For every £8 you deposit, the government adds £2 — a 25% top-up, or equivalently 20p for every 80p you pay in. The maximum government contribution is: - £500 per quarter (£2,000 per year) per child - £1,000 per quarter (£4,000 per year) per disabled child To receive the maximum £2,000 government top-up, you need to deposit £8,000 from your own funds per year per child. **Eligibility 2026** - Both parents (or the single parent) must be in paid work, each expecting to earn at least £2,379 per quarter (equivalent to 16 hours per week at NLW £12.21/hr) - Neither parent must have adjusted net income over £100,000 in the relevant tax year - The child must be under 12 (or under 17 if disabled) - You cannot claim TFC at the same time as childcare vouchers, the childcare element of Working Tax Credit, or Universal Credit childcare support **Qualifying childcare** Registered childminders, nurseries, nannies registered with Ofsted, and after-school clubs all qualify. The account cannot be used for boarding school fees. **Worked example** Two working parents pay £2,000/month into nursery fees for a 2-year-old. They open a TFC account, deposit £8,000 in the year, and receive £2,000 government top-up — effectively reducing their annual nursery bill by £2,000. Combined with 15 hours of free childcare (and 30 hours for 2-year-olds from September 2024), the total saving can be substantial.

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