Parents and carers - 2, 3 and 4 year old Early Education funding

What is tax-free childcare?

Tax-free childcare is a government initiative that helps parents to pay for childcare costs. You can get up to £500 every three months (up to £2,000 a year) for each of your children to help with the costs of childcare. This goes up to £1,000 every three months if a child is disabled (up to £4,000 a year).

If you get tax-free childcare, you’ll set up an online childcare account for your child. For every £8 you pay into this account, the government will pay in £2 to pay your provider.

You can get tax-free childcare at the same time as 30 hours' free childcare if you’re eligible for both.

Once you have set up your account you will need to reconfirm you are still eligible for tax-free childcare using your childcare service account.  This reconfirmation must be completed every three months.  It's easy to do; you just tick a box to confirm that your details haven't changed. You'll be reminded to do this, four weeks before the reconfirmation deadline.

How much you pay into your tax-free childcare account, and when, is up to you. You can make one-off payments (for example, by debit card) or set up a standing order to make regular payments into your tax-free childcare account.

You can pay up to 10 childcare providers from each tax-free childcare account. You'll need to make a separate payment for each eligible child.

Other people, such as family members and employers, can also pay into your tax-free childcare account.

When you use your tax-free childcare account to pay a childcare provider, it can take 2-3 working days for your money to reach them.

Who is eligible?

Find out if you are eligible for a Tax-Free Childcare account.

You can use the Childcare Calculator to work out if you'll be better off with tax-free childcare, before you apply and stop your Tax Credits, Universal Credit or Childcare Vouchers.

You can't apply for tax-free childcare for a child who is:

• your foster child
• living away from your home for six months or more
• in a young offenders' institution or secure children's home or training centre
• being looked after by a local authority, unless it is short-term respite care

If you're adopting a child, you can apply for Tax-Free Childcare when a court has made an adoption order.

Tax-free childcare can be used to pay for costs such as;

• childcare with regulated (approved or Ofsted registered) childcare providers, for example, day nurseries, pre-schools, childminders, playschemes, before, afterschool and holiday clubs and school-based provision.
• advance payments, block bookings and individual sessions
• the costs of employing a nanny or extra childcare if using a workplace nursery

If your childcare provider is not registered or approved, HMRC will tell you.  When they do, you'll no longer be able to pay that particular childcare provider using your tax-free childcare account.

You can continue to make payments into your tax-free childcare account and choose to pay a different childcare provider that has signed up to tax-free childcare.

Apply for tax-free childcare

Apply online for tax-free childcare.

If you apply for Tax-Free Childcare and someone else already gets 30 hours free childcare for that child, their 30 hours will stop at the end of the next term. You will be eligible for 30 hours free childcare instead.

Closing your tax-free childcare account

If you are no longer eligible for tax-free childcare, you can still add money to your account, but you won't receive any government contributions. You can still use the balance in your tax-free childcare account to pay for childcare.

If you no longer want to use your tax-free childcare account, you can withdraw your money. If you do, for every £8 you take out the UK government will also take back its £2 contribution.

Extra support

• 10 things parents should know about tax-free childcare
• YouTube video: how to apply
• overview of the money towards paying for childcare costs.

Help with childcare costs if you claim Universal Credit

If you are working and in receipt of Universal Credit, you can get help with childcare costs to help with childcare whilst you are in work. This includes holiday clubs, after-school and breakfast clubs. If you live with a partner, you both need to be working, unless your partner cannot look after your children.

How it works

1. You pay the childcare provider for the childcare they have provided.
2. You provide evidence of these costs to Universal Credit
3. Universal Credit reimburses you up to 85% of the cost of these fees.

Please note: You will only get the money back with Universal Credit after the childcare happens.

Universal Credit childcare costs.

Further information regarding support with childcare costs can be found on the Childcare Choices leaflet.