Who can claim Tax-Free Childcare?

Working parents, single or in a couple, where each parent expects to earn at least £2,643.68 over the next 3 months if aged 21 or over (16 hours a week at the National Living Wage; lower amounts apply under 21) and neither expects adjusted net income over £100,000 for the tax year. The child must usually live with you and is eligible until the September after they turn 11, or 16 if disabled. You need a National Insurance number and a qualifying immigration status. You cannot get Tax-Free Childcare while claiming Universal Credit or childcare vouchers.

How does the 20% top-up actually work?

You open a childcare account for each child. For every £8 you pay in, the government adds £2, so it covers 20% of the bill. The top-up is capped at £500 every 3 months per child (£2,000 a year), or £1,000 every 3 months (£4,000 a year) for a disabled child. To get the full £2,000 you need £10,000 of childcare in the year: £8,000 from you plus £2,000 of top-up. You pay your provider directly from the account.

What counts as eligible childcare?

The provider must be approved childcare and signed up to the scheme: a registered childminder, nanny, playscheme, nursery or club, a childminder or nanny with a registered childminder agency or childcare agency, a registered school, or a home care worker with a registered home care agency. That covers nurseries, childminders, nannies, breakfast, after-school and holiday clubs, and extras such as meals, nappies and trips supplied by the provider.

Can I use Tax-Free Childcare alongside 30 hours free childcare?

Yes. In England, Free Childcare for Working Parents gives up to 30 hours a week for children aged 9 months to 4 years, and all 3 and 4 year olds can get 15 hours a week for 38 weeks of the year. The free hours are funded directly to the provider; Tax-Free Childcare can pay for extra hours and extras. You apply for both through the same childcare account and confirm your details every 3 months. Scotland, Wales and Northern Ireland have different schemes.

Is Tax-Free Childcare or Universal Credit better?

It depends on the household, and you cannot claim both at the same time. Universal Credit can pay back up to 85% of childcare costs, capped in 2026/27 at £1,071.09 a month for one child and £1,836.16 for two or more, but only if you qualify for Universal Credit. Tax-Free Childcare pays 20% of costs up to £2,000 a year per child and is open up to the £100,000 limit. If you already get Universal Credit, wait for a decision on your Tax-Free Childcare application before cancelling it. The gov.uk childcare calculator compares the two.

What about Childcare Vouchers - can I still use those?

Only if you joined an employer scheme and your wages were adjusted on or before 4 October 2018, and you do not take an unpaid career break of more than a year. Up to £55 a week is free of Income Tax and National Insurance; for people who joined from 6 April 2011 the limit is £28 a week for higher-rate and £25 for additional-rate taxpayers (HMRC EIM16053). You cannot get new vouchers and Tax-Free Childcare together: you must tell your employer within 90 days of applying, and you then cannot rejoin the voucher scheme.

What if my income changes during the year?

The £100,000 test uses your expected adjusted net income for the whole tax year, and the minimum earnings test uses what you expect to earn over the next 3 months. You must sign in every 3 months to confirm your details are up to date; if you no longer qualify, or you do not reconfirm, the top-ups stop. Adjusted net income is the measure also used for the Personal Allowance taper, so pension contributions, including by salary sacrifice, can bring it back under £100,000.

What is the quarterly cap and why does it matter?

The £2,000 (£4,000) yearly top-up is made up of a £500 (£1,000) limit for each 3-month period. Paying a large sum into the account in one period only attracts that period's £500 of top-up, so if your childcare costs are lumpy (for example summer holiday clubs), spreading your payments across the year captures more of the yearly maximum. This calculator works at the annual level; the 3-month limit is what applies in practice.

£20,000 Annual Childcare Cost: UK Tax-Free Childcare 2026/27

A working family with one eligible child paying £20,000 a year for registered nursery, childminder or after-school care, where both parents earn under £100,000 and over 16 hours at minimum wage, receives £2,000 a year from HMRC as a 20% Tax-Free Childcare top-up, bringing the net cost to £18,000 a year (£1,500 a month). With two children at the same total bill the top-up rises to £4,000 because each child has its own £2,000 cap. At this spend the single-child cap is fully used - any extra spend above the £10,000 eligible threshold is paid in full by the parent. This is general guidance based on the published HMRC scheme - verify on gov.uk Get Tax-Free Childcare.

1 child, both parents working

£2,000/yr

Net cost £18,000 after top-up

Monthly deposit you make

£1,500/mo

HMRC adds 20% on top as you deposit

Annual saving from TFC

£2,000

Equivalent to a 20% discount on eligible spend up to the cap

How the top-up is calculated on £20,000 of childcare

Confirm both parents earn at least 16 hours a week at the National Minimum Wage / National Living Wage and that neither has adjusted net income above £100,000 for the year. At £20,000 of childcare with both parents earning under £100,000, the household is eligible for the current 3-month entitlement period.
Identify the eligible spend cap. Each regular child has a £10,000 a year eligible-spend ceiling that attracts the full £2,000 top-up; a disabled child has a £20,000 ceiling that attracts £4,000.
Apply the 20% top-up to eligible spend. On £20,000 for one regular child, the eligible portion is £10,000 and the top-up is £2,000.
Net cost to the parent: £20,000 less the top-up = £18,000 a year (£1,500 a month).
Deposit cadence: pay £1,500 a month into the Childcare Account on gov.uk; HMRC adds the top-up within hours. Pay your registered childcare provider directly from the account. Reconfirm eligibility every 3 months.

Four household profiles at £20,000/yr

Annual top-up by household type at this cost level. Both parents assumed under £100,000; reconfirm every 3 months on the main calculator.

Household	Top-up	Net cost	Monthly deposit
1 child	£2,000	£18,000	£1,500
2 children	£4,000	£16,000	£1,333
1 disabled child	£4,000	£16,000	£1,333
Single parent, 1 child	£2,000	£18,000	£1,500

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Related calculators

Tax-Free Childcare calculator - adjust children, incomes and cost to model your own household.
Universal Credit calculator - model the UC childcare element as the alternative scheme.
60% tax trap calculator - the £100,000 boundary that decides TFC eligibility.
Salary sacrifice calculator - reduce adjusted net income below £100k via pension sacrifice.

Frequently asked questions

Who can claim Tax-Free Childcare?: Working parents, single or in a couple, where each parent expects to earn at least £2,643.68 over the next 3 months if aged 21 or over (16 hours a week at the National Living Wage; lower amounts apply under 21) and neither expects adjusted net income over £100,000 for the tax year. The child must usually live with you and is eligible until the September after they turn 11, or 16 if disabled. You need a National Insurance number and a qualifying immigration status. You cannot get Tax-Free Childcare while claiming Universal Credit or childcare vouchers.
How does the 20% top-up actually work?: You open a childcare account for each child. For every £8 you pay in, the government adds £2, so it covers 20% of the bill. The top-up is capped at £500 every 3 months per child (£2,000 a year), or £1,000 every 3 months (£4,000 a year) for a disabled child. To get the full £2,000 you need £10,000 of childcare in the year: £8,000 from you plus £2,000 of top-up. You pay your provider directly from the account.
What counts as eligible childcare?: The provider must be approved childcare and signed up to the scheme: a registered childminder, nanny, playscheme, nursery or club, a childminder or nanny with a registered childminder agency or childcare agency, a registered school, or a home care worker with a registered home care agency. That covers nurseries, childminders, nannies, breakfast, after-school and holiday clubs, and extras such as meals, nappies and trips supplied by the provider.
Can I use Tax-Free Childcare alongside 30 hours free childcare?: Yes. In England, Free Childcare for Working Parents gives up to 30 hours a week for children aged 9 months to 4 years, and all 3 and 4 year olds can get 15 hours a week for 38 weeks of the year. The free hours are funded directly to the provider; Tax-Free Childcare can pay for extra hours and extras. You apply for both through the same childcare account and confirm your details every 3 months. Scotland, Wales and Northern Ireland have different schemes.
Is Tax-Free Childcare or Universal Credit better?: It depends on the household, and you cannot claim both at the same time. Universal Credit can pay back up to 85% of childcare costs, capped in 2026/27 at £1,071.09 a month for one child and £1,836.16 for two or more, but only if you qualify for Universal Credit. Tax-Free Childcare pays 20% of costs up to £2,000 a year per child and is open up to the £100,000 limit. If you already get Universal Credit, wait for a decision on your Tax-Free Childcare application before cancelling it. The gov.uk childcare calculator compares the two.
What about Childcare Vouchers - can I still use those?: Only if you joined an employer scheme and your wages were adjusted on or before 4 October 2018, and you do not take an unpaid career break of more than a year. Up to £55 a week is free of Income Tax and National Insurance; for people who joined from 6 April 2011 the limit is £28 a week for higher-rate and £25 for additional-rate taxpayers (HMRC EIM16053). You cannot get new vouchers and Tax-Free Childcare together: you must tell your employer within 90 days of applying, and you then cannot rejoin the voucher scheme.
What if my income changes during the year?: The £100,000 test uses your expected adjusted net income for the whole tax year, and the minimum earnings test uses what you expect to earn over the next 3 months. You must sign in every 3 months to confirm your details are up to date; if you no longer qualify, or you do not reconfirm, the top-ups stop. Adjusted net income is the measure also used for the Personal Allowance taper, so pension contributions, including by salary sacrifice, can bring it back under £100,000.
What is the quarterly cap and why does it matter?: The £2,000 (£4,000) yearly top-up is made up of a £500 (£1,000) limit for each 3-month period. Paying a large sum into the account in one period only attracts that period's £500 of top-up, so if your childcare costs are lumpy (for example summer holiday clubs), spreading your payments across the year captures more of the yearly maximum. This calculator works at the annual level; the 3-month limit is what applies in practice.