What is the Tax-Free Childcare scheme in the UK?

Full answer

**Tax-Free Childcare (TFC)** is a government top-up scheme for working families to help with childcare costs for children up to age 11 (or 16 if disabled). **How it works:** - Open a **childcare account** via gov.uk/tax-free-childcare - For every **£8** you deposit, the government adds **£2** (20% top-up) - Maximum government contribution: **£500 per quarter (£2,000/year)** per child — or **£1,000 per quarter (£4,000/year)** for disabled children - Use the funds to pay registered childminders, nurseries, after-school clubs, holiday clubs, and nannies **Eligibility:** - Both parents (or sole parent/carer) must be in work (or starting work within 31 days) - Each parent must earn at least the equivalent of **16 hours at the National Minimum Wage** per week (approximately £9,518/year at 2026/27 NMW rates) - Neither parent must have adjusted net income above **£100,000** — if either earns over £100k, the family is ineligible - Child must be under 11 (or under 16 if disabled) **Incompatible schemes:** Tax-Free Childcare **cannot** be used alongside **Universal Credit Childcare** or the old **Childcare Vouchers** (a legacy salary sacrifice scheme, closed to new entrants since October 2018 but still in operation for existing members). **30 hours free childcare:** Tax-Free Childcare is separate from the 30-hour free childcare entitlement for 3–4 year olds (and from 9 months for working families since September 2024). You can use both simultaneously. **Re-confirming eligibility:** You must **reconfirm your eligibility every 3 months** via your childcare account — failing to do so pauses the government top-up.

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