Tax-Free Childcare 2026: How to Claim Up to £2,000 Per Child Per Year
Tax-Free Childcare gives you £2 for every £8 you spend on childcare — up to £2,000/yr per child (£4,000 for disabled). Who qualifies, how to apply in 20 minutes, and the £100k income trap that catches many families.
Quick answer
Tax-Free Childcare (TFC) lets working parents pay into a government-backed childcare account where the state adds 20p for every 80p contributed. The maximum government contribution is £500 per quarter (£2,000/year) per child — genuinely free money from HMRC.
If you are not claiming it and your child is in registered childcare, you are leaving up to £2,000/yr per child on the table.
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Open Take-Home Pay calculatorHow Tax-Free Childcare works
Step 1: You open a TFC account at gov.uk/tax-free-childcare (one per child).
Step 2: You deposit money into the account. For every £8 you deposit, the government adds £2 — making £10 available to spend.
Step 3: Your childcare provider must be registered to accept TFC payments. Most nurseries, childminders, after-school clubs and holiday clubs are. You pay them directly from the TFC account.
Maximum government top-up:
- Standard: £500 per quarter = £2,000 per year per child.
- Disabled child: £1,000 per quarter = £4,000 per year per child.
You can deposit any amount up to the limit (maximum £8,000/yr per standard child to trigger the £2,000 government contribution), but you don't have to deposit the maximum each quarter.
Example: nursery costs £1,200/month
| Without TFC | With TFC | |
|---|---|---|
| Annual childcare spend | £14,400 | £14,400 |
| Your contribution | £14,400 | £12,400 (via TFC account) |
| Government top-up | £0 | £2,000 |
| Effective annual cost | £14,400 | £12,400 |
You save £2,000/year — which is £167/month simply by routing payment through the TFC account.
Who qualifies
Both parents (or the single parent in a single-parent household) must:
- Be working at least 16 hours per week.
- Earn at least the equivalent of 16 hours at the National Living Wage (£12.71/hr in 2026/27) = approximately £203/week = £10,556/yr.
- Earn no more than £100,000 adjusted net income per year.
The child must:
- Be under 12 years old (under 17 if disabled).
- Be in the UK.
- Use registered childcare.
Special cases
- Newly self-employed: if you've been self-employed less than 12 months, you can use TFC during a "start-up period" even if you haven't yet earned the minimum. You still must not exceed £100,000.
- Parental leave: you remain eligible if you are on paid maternity/paternity leave. If on unpaid parental leave, eligibility pauses.
- One partner not working: if one partner doesn't work (not in paid employment, not self-employed), you generally cannot claim TFC — both must be working. Exception: if one partner is unable to work due to disability or long-term ill health, eligibility may still apply.
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Open Salary Sacrifice calculatorThe free childcare hours: stackable with TFC
TFC is separate from the government's free childcare hours entitlement:
| Free hours entitlement | Children | Hours | Eligibility |
|---|---|---|---|
| Universal 15 hours | All 3–4 year olds | 15 hrs/wk | No work requirement |
| Extended 30 hours | 3–4 year olds (working parents) | 30 hrs/wk | Both parents working ≥16hrs/wk, each <£100k |
| Extended 15 hours (from Sept 2024) | 2–3 year olds (working parents) | 15 hrs/wk | Both parents working ≥16hrs/wk, each <£100k |
Free hours reduce your out-of-pocket childcare costs. TFC then gives you 20% government money on what you still spend. You can claim both simultaneously.
Example: 3-year-old in nursery
- Nursery charges £1,000/mo for full-time (50 hrs/wk).
- 30 free hours cover 30/50 = 60% of the time → free hours credit reduces bill to ~£400/mo.
- You pay £400/mo through TFC account = £4,800/yr.
- Government TFC top-up: 20% of £4,800 = £960/yr free.
How to apply: step-by-step
Time required: approximately 20 minutes.
- Go to gov.uk/tax-free-childcare.
- Click "Apply now".
- Sign in with Government Gateway credentials (or create an account if new).
- Answer eligibility questions for each child.
- Receive a reference number and account ID.
- Register your childcare provider using their Ofsted registration number or unique reference.
- Transfer money in via bank transfer or debit card.
- Set up payment to your provider.
Reconfirm every 3 months
HMRC emails a reminder approximately 3 months after your last confirmation. Log in and confirm your circumstances haven't changed. Takes 2–3 minutes. If you miss it, your account is suspended — no new money can be deposited or paid out until you reconfirm.
The £100,000 income trap
This is the most important caveat: if either parent earns over £100,000 adjusted net income, the whole household loses TFC.
Adjusted net income is:
- Gross income
- Less pension contributions (employer and employee)
- Less Gift Aid donations
Why this is particularly nasty between £100k and £125,140
Between £100,000 and £125,140, the Personal Allowance taper applies: you lose £1 of PA for every £2 over £100,000. This creates an effective 60% income tax rate in that band.
On top of this: if your income is above £100,000 you also lose TFC. For a family with two children, that is £4,000/yr of government money gone — equivalent to approximately another 8% effective tax rate on the relevant band for a typical childcare spend.
The salary sacrifice solution
If your adjusted net income is between £100,000 and approximately £110,000, pension salary sacrifice is the most tax-efficient solution:
- Reduces adjusted net income below £100,000.
- Restores TFC eligibility (saving up to £4,000/yr per two children).
- Eliminates the 60% effective rate zone.
- Employer NI saving from sacrifice may be passed back to you.
Example: salary £105,000, one child in nursery
Without action: loses TFC (£2,000/yr), faces 60% effective rate on £5,000 = £3,000 extra tax.
With £5,001 salary sacrifice into pension: adjusted net income = £99,999. TFC restored. 60% band avoided. Annual saving vs no sacrifice: approximately £5,000.
Benefit Entitlement Checker (Universal Credit)
Estimate your monthly Universal Credit using 2025/26 standard allowances, child elements and the 55% taper.
Open Benefit Entitlement calculatorTFC vs legacy employer childcare vouchers
The employer childcare voucher scheme closed to new applicants on 4 November 2018. If you joined before that date, you may still be in the scheme. You cannot be in both TFC and employer vouchers simultaneously.
General comparison:
| TFC | Employer vouchers (legacy) | |
|---|---|---|
| Government benefit | 20% on childcare spend | NI and IT saving on voucher value |
| Max saving/yr (basic rate) | £2,000 | ~£933 |
| Max saving/yr (higher rate) | £2,000 | ~£623 |
| Availability | Open to all qualifying new claimants | Closed to new joiners Nov 2018 |
For most families spending over £175/week on childcare, TFC provides a larger saving. Check your specific numbers before switching from legacy vouchers, as the voucher saving depends on your tax rate and earnings.
Childcare costs that TFC covers
| Covers | Does not cover |
|---|---|
| Registered nurseries | School fees |
| Registered childminders | Informal babysitters |
| Registered after-school clubs | Unregistered childcare |
| Registered holiday clubs | Relatives (unless registered childminder) |
| Breakfast clubs |
Sources
- HMRC: Tax-Free Childcare
- HMRC: Childcare Choices
- DfE: 30 hours free childcare
- HMRC: Employer-supported childcare
Frequently asked questions
What is Tax-Free Childcare and how much can I save?
Tax-Free Childcare (TFC) is a government scheme where you pay into a childcare account and the government adds 20p for every 80p you put in — up to £500 per quarter (£2,000 per year) per child. For disabled children the maximum government top-up is £1,000 per quarter (£4,000 per year).
Who is eligible for Tax-Free Childcare?
Both parents (or a single parent) must be working at least 16 hours per week at the National Living Wage equivalent (roughly £203/wk at £12.71/hr). Each parent must earn less than £100,000 adjusted net income per year. The child must be under 12 (or under 17 if disabled).
How do I apply for Tax-Free Childcare?
Apply at gov.uk/tax-free-childcare. You will need your Government Gateway login, your National Insurance number, and your childcare provider's details. The application takes approximately 20 minutes. You must reconfirm your eligibility every 3 months or your account is suspended.
What childcare costs does Tax-Free Childcare cover?
TFC covers registered nurseries, childminders, after-school clubs, holiday clubs, and breakfast clubs. It does not cover childcare provided by a family member (unless they are a registered childminder), school fees, or informal babysitting.
What is the £100,000 income trap for Tax-Free Childcare?
If either parent's adjusted net income exceeds £100,000, both parents lose eligibility for TFC entirely. The only way to avoid this is to reduce adjusted net income below £100,000 — typically through pension contributions or salary sacrifice.
Can I use Tax-Free Childcare and the 30 free hours together?
Yes. The 30 free childcare hours (for eligible working parents of 3–4 year olds, extended to 2–3 year olds from September 2024) and Tax-Free Childcare are separate entitlements and can both be used. The free hours cover a specific number of childcare hours; TFC covers the rest of your spend.
Is Tax-Free Childcare better than employer childcare vouchers?
For most families, TFC is better — especially if childcare costs exceed £175/week. Employer childcare vouchers are no longer available to new applicants (the scheme closed to new joiners in November 2018). If you are still in a legacy voucher scheme, compare your current saving against TFC before switching.
What happens if I earn between £100,000 and £125,140?
You lose TFC (both parents), and you also face the Personal Allowance taper — an effective 60% income tax rate in this band. Salary sacrifice into a pension to bring adjusted net income below £100,000 solves both problems simultaneously.
How often do I need to reconfirm my eligibility?
Every 3 months. HMRC sends a reminder. If you miss the reconfirmation window, your account is suspended and you cannot use the funds (though they remain there). Reconfirming online takes 2–3 minutes.
Can self-employed parents use Tax-Free Childcare?
Yes. Self-employed parents qualify if they are earning at least 16 hours per week at NMW equivalent (roughly £10,888/yr in 2026/27) and earning below £100,000 adjusted net income. Newly self-employed parents can use a start-up period where the minimum income requirement is waived for the first year.
Try the calculators
Salary Sacrifice Calculator
Calculate how much tax and National Insurance you save by making salary sacrifice contributions to a pension, cycle to work scheme or EV car scheme.
Take-Home Pay Calculator
Calculate your net salary after income tax, National Insurance and student loan deductions.
Benefit Entitlement Checker (Universal Credit)
Estimate your monthly Universal Credit using 2025/26 standard allowances, child elements and the 55% taper.
Related reading
Back to School 2026: Financial Checklist for Parents
September 2026 brings children back to school — and a set of financial tasks for parents. Free childcare hours, Tax-Free Childcare, Child Trust Fund maturity, Child Benefit claims, and more.
Child Benefit 2026/27: Rates, Who Gets It and the High Income Charge
Child Benefit pays £27.05/week for your first child and £17.90/week for each additional child in 2026/27. Full guide to rates, the High Income Child Benefit Charge, and how salary sacrifice can protect your entitlement.
Salary Sacrifice Pension Calculator Guide 2026/27
How much does salary sacrifice into a pension really save you in 2026/27? We break down the income tax and National Insurance savings by tax band, with worked examples and the traps to avoid.