Tax-Free Childcare Account

HMRC are running a campaign to remind people that they could get up to £2,000 per child, per year, towards childcare costs.

Broadly, eligible parents or guardians can receive government top-ups of 20p for every 80p that they pay into a tax-free childcare account, up to a maximum of £2,000 per child or £4,000 for disabled children. There is an overall maximum limit of £10,000. The scheme is open to all working parents across the UK with children under 12, or under 17 if the child is disabled.

Under the scheme, the parent/guardian can open an online account and decide how much to pay in. Circumstances are re-confirmed online every three months. Contributions into the account are not limited to just parents/guardians. Grandparents, other family members or employers can also contribute which provide flexibility to pay in more some months and less other times.

Funds can be withdrawn at any time however in doing so, the government top-up contribution will be lost.

To meet the requirements for the government contribution, account holders will usually have to be in work, earning at least the National Minimum Wage (NMW) or Living Wage (LW) for 16 hours a week on average, over the next 3 months.

Individuals who are self employed and do not expect to make enough profit within the next three months, can use the average of their expected income level in a current tax year. Moreover, the earnings limit does not apply to self employed individuals if the business was established less than 12 months ago.

Dis-similarly to the previous childcare scheme, this scheme does not depend on employers offering it. A tax-free childcare scheme can be accessed by any working family providing that they meet the eligibility requirements.

By using The Childcare Choices website, parents/guardians can compare all schemes and offers available and determine which one works best for them. This includes offers such as the 30-hour free childcare, tax-free childcare or universal credit.

Tax-Free Childcare

  • for working families including self-employed, in the UK
  • with children under 12 (under 17 if disabled)
  • for every £8 you pay in, the government will add an extra £2, up to £2,000 per child per year

15 hours free childcare 2 year old 

  • for families in England, receiving some forms of support
  • with 2-year-old children
  • 15 years of free childcare of early education for 38 weeks
  • total of 570 hour per year, that you an use flexibly with one or more childcare providers
  • some providers allow to ‘stretch’ the hours over 52 weeks, using fewer hours per week

15 hours free childcare 3 and 4 years old children

  • for all families in England
  • with 3 and 4 year old children
  • 15 hours of free childcare of early education for 38 weeks
  • total of 570 hours per year, that you can use flexibly with one or more childcare providers
  • some providers allow to ‘stretch’ the hours over 52 weeks, using fewer hours per week

30 hours free childcare for 3 and 4 years old children

  • For working families in England
  • With 3 and 4-year-old children
  • 30 hours of free childcare or early education for 38 weeks
  • A total of 1,140 hours per year, that you can use flexibly with one or more
    childcare provider
  • Some providers will allow you  to ‘stretch’ the hours over 52 weeks, using fewer hours per week

Universal Credit for childcare 

  • For working families claiming Universal Credit, in England, Scotland, Northern Ireland and Wales
  • With children under 17
  • 85% of eligible childcare costs, up to a cap.