Tax-Free Childcare: Eligibility, Top-Up, and How to Apply

Tax-Free Childcare is a UK government scheme that gives working families a 20% discount on approved childcare. You pay money into a dedicated online account, and for every £8 you deposit the government adds £2, up to £2,000 per child each year (£4,000 if your child is disabled). It’s open to families with children aged 11 or under, or 16 or under where the child has a disability.¹

How the Top-Up Works

HMRC sets up an online childcare account in your name. You transfer money in from your bank, and the government automatically adds a 25% boost on top of your contribution, which reduces the total childcare bill by 20%.¹

A £250 bill works like this: you pay in £200, the government adds £50, and you send the £250 to your provider from the account. The top-up is capped at £500 every three months per child, which totals £2,000 a year. For a disabled child, the cap doubles to £1,000 per quarter and £4,000 a year.²

Your deposit and the government’s contribution usually land in the account within one working day.¹

Who Qualifies

If you have a partner, both of you have to meet the rules for the household to qualify.³

You must each expect to earn at least the equivalent of 16 hours a week at the National Minimum Wage or National Living Wage over the next three months. From April 2026, the National Living Wage for workers aged 21 and over is £12.71 an hour, so that works out to roughly £203 a week or around £2,644 a quarter.⁴
Neither of you can have an adjusted net income above £100,000 a year. Foreign income counts.
You must be in the UK (or treated as being in the UK) and at least 16 years old.⁵

You still count as being in qualifying paid work while on maternity, paternity, shared parental, adoption, sick, or annual leave, while receiving statutory neonatal care pay, or on bereaved partner paternity leave.⁵

Where one partner isn’t working, the household can still qualify if that partner receives Incapacity Benefit, Severe Disablement Allowance, Carer’s Allowance (Carer Support Payment in Scotland), or contribution-based Employment and Support Allowance, and the other partner meets the work requirements.⁵

If You’re Self-Employed

The same minimum earnings rule applies, but your income is looked at over a longer horizon. New businesses get a 12-month start-up period during which the earnings threshold doesn’t apply at all, covering your first declaration and the next three quarterly reconfirmations. You can’t use a second start-up period unless at least 48 months have passed since the last one ended.⁶

Which Children the Scheme Covers

A child qualifies from birth until 1 September after their 11th birthday. For a disabled child, cover runs until 1 September after their 16th birthday, and the annual top-up cap rises from £2,000 to £4,000. A child counts as disabled for the scheme if they receive Disability Living Allowance, Personal Independence Payment, or Armed Forces Independence Payment, or if they are certified as severely sight-impaired or blind.¹

Approved Providers Only

You can only spend the balance with providers registered with the appropriate regulator (Ofsted in England, and the equivalent body elsewhere). That includes registered childminders and nannies (either individually registered or working through a registered agency), nurseries and playgroups, after-school clubs, play schemes, holiday clubs, registered schools, and home care workers employed by a registered home care agency.¹

Informal arrangements with friends or relatives who aren’t registered don’t qualify. If you’re unsure, ask your provider for their registration number before setting up payments.

How to Apply

You apply online through the GOV.UK childcare account portal. Have the following ready for yourself and your partner:

National Insurance numbers
Unique Taxpayer Reference, if self-employed
Current income and expected earnings for the next quarter
Your child’s full legal name and date of birth
Disability benefit award letters, if relevant

You’ll usually find out straight away whether you’re eligible, though it can take up to seven days if income needs to be checked against tax records.⁷ Figures that don’t match government records cause delays or rejections, so check income amounts and National Insurance numbers carefully before submitting.

Paying and Reconfirming Every Three Months

Once the account is live, you transfer money in, the top-up appears, and you search for your provider inside the portal by name or registration number and pay them directly.¹

Every three months you have to sign in and confirm your details are still correct. HMRC uses that check to see whether your income and employment still meet the criteria. Miss the deadline and your Tax-Free Childcare stops: the government won’t add top-ups to further deposits until you log back in and reconfirm.⁸ Set a calendar reminder. The reconfirmation window opens a few weeks before the deadline and takes a couple of minutes, but people rely on the email nudges and get caught out.

How It Interacts With Other Support

You cannot claim Tax-Free Childcare at the same time as Universal Credit or employer-provided childcare vouchers.⁵ That’s the point worth pausing on. The Universal Credit childcare element can cover up to 85% of childcare costs (subject to monthly caps), which is far more generous than the 20% discount from Tax-Free Childcare. If you’re already receiving Universal Credit and switch, you could end up worse off. Compare both before you move, and use the childcare calculator on GOV.UK to see which comes out ahead.

Tax-Free Childcare does sit alongside the 15 or 30 hours of free childcare for working parents. The free hours cover the entitlement itself, and you can use Tax-Free Childcare for any additional hours or costs on top.

Getting Money Back Out

If your circumstances change or you no longer need the account, you can withdraw the money you deposited. The government takes back its corresponding top-up at the same time, so you keep only what you put in yourself.⁹ For that reason, deposit only what you expect to spend on childcare in the near term, rather than building up a large balance you might not be able to use if your child ages out or your earnings change.

1
GOV.UK. Tax-Free Childcare
2
GOV.UK. Back to School? HMRC Can Help With Childcare Costs
3
Legislation.gov.uk. Childcare Payments Act 2014
4
GOV.UK. National Minimum Wage and National Living Wage Rates
5
Best Start in Life. Eligibility for Tax-Free Childcare
6
GOV.UK. Self-Employed Person – Start-Up Periods
7
GOV.UK. Apply for Tax-Free Childcare – What You Need to Apply
8
GOV.UK. Sign In to Your Childcare Account
9
GOV.UK. Tax-Free Childcare – 10 Things Parents Should Know