Tax free childcare: What you need to know
Find out how you can claim tax free childcare
Childcare costs can really add up, so knowing what support is available is a must.
The government’s Tax-Free Childcare scheme is designed to ease the pressure by topping up what you pay towards childcare.
How much can you save with Tax-Free Childcare?
For every £8 you pay into your Tax-Free Childcare account, the government adds an extra £2. You can get up to £2,000 per child per year (or up to £4,000 a year if your child is disabled) to help cover childcare costs of up to £10,000 annually.
Up to £10,000 a year in childcare costs per child can qualify for the scheme – which means you could get up to £2,000 a year per child towards your childcare (or up to £4,000 if your child is registered disabled).
To break this down monthly: if your childcare bill is £500 a month, you’d pay £400, with the government topping up the remaining £100. Over a year, that reduces a £6,000 bill to £4,800r
How does it work?
For every £8 you pay in, the government adds £2. This gives you back the equivalent of basic-rate tax on what you spend, which is why it’s called “Tax-Free Childcare.”
What if my childcare bill is over £10,000 a year?
Once your childcare costs exceed the £10,000 annual limit, you won’t receive extra support. For example, if your bill is £1,000 a month, the scheme will cover £200 each month for the first 10 months (up to the £2,000 limit). After that, you’ll need to cover the full amount yourself.
How do I apply?
You’ll need to set up a Childcare Account at gov.uk. The application takes around 20 minutes. Once approved, you can use the account to pay your childcare provider, and the government will top up your payments by 20% every time you pay in. Top-ups are applied per child, every 3 months.
Note: You can’t open an account more than 31 days before returning to work after maternity or paternity leave.