Help with childcare costs

Tax-Free Childcare is a government scheme to help working parents with the cost of childcare in England, Scotland, Wales and Northern Ireland.

It can pay for:

• registered childminders, nurseries and nannies
• registered breakfast, after-school clubs and playschemes, holiday schemes
• registered schools (not including school fees, unless your child is below the compulsory school age)
• homecare workers working for a registered homecare agency.

You can use Tax-Free Childcare at the same time as using 15 hours or 30 hours of free childcare.

However, you can’t use Tax-Free Childcare at the same time as:

• Universal Credit
• tax credits
• childcare vouchers.

In many cases, the benefits listed above will pay more than Tax-Free Childcare.  

If you already get help with childcare costs from Universal Credit or tax credits, opening a Tax-Free Childcare account will stop all your benefits payments, not only those for childcare. 

If you're not sure if you will be better off using Tax-Free Childcare or State benefits, you may want to speak to an independent adviser on benefits at Advice LocalOpens in a new window

To qualify, a parent or parents normally need to:

• Be working and have children under 12 – or under 17 if your child has a disability. They stop being eligible on 1 September after the child’s 11th birthday. Adopted children qualify, but foster children don’t
• Earn at least £152 a week on average each. This is equivalent to 16 hours at the National Minimum Wage or National Living Wage.
• Have no more than £100,000 adjusted net income per year, per parent. Find out more about adjusted net income at GOV.UK
• Be employed or self-employed. If you or your partner are on maternity, paternity or adoption leave you might still qualify. You can apply if you’re starting or re-starting work within the next 31 days.

Do you have caring responsibilities, or are ill or disabled and so not able to work? Then you’ll still qualify for a childcare account if one parent is in work and the other isn’t able to work and receives any of the following benefits:

• Carer’s Allowance
• Incapacity Benefit or long-term Incapacity Benefit
• Severe Disablement Allowance
• Contribution-based Employment and Support Allowance
• National insurance credits because of incapacity or limited capability for work.

For every £8 you pay into your childcare account, the government will pay in £2 – up to a maximum of £2,000 per child each year, or £4,000 per disabled child each year.

So if you have one child and you pay in £8,000 into your childcare account, the government will pay in £2,000. Once you put the money in, it’s normally topped up by the next working day.

Payments into your account will normally take one working day for debit card payments and three working days for bank transfers. Payments will show as ‘available funds’ once they have processed.

The government contributions are limited to £500 every three months or £1,000 for a disabled child. To get the maximum contribution you must contribute to your online account in every three-month period or quarter of the year.

Others, such as grandparents or family friends, can also pay into the account.

You apply online by setting up a childcare account at GOV.UKOpens in a new window

You must ‘reconfirm’ your eligibility every three months. You should get a reminder message to do this. You can do this using your online childcare account.

If your circumstances haven’t changed, you can simply confirm this. If they have changed, the government will re-run the eligibility checks.

How much you can get depends on which country you live in. You can use Tax-Free Childcare at the same time as using 15 or 30 hours free childcare.

In addition, from April 2024, 15 hours of childcare will be extended to parents of children aged two years old in Great Britain. And in September 2024 , working parents of children aged nine months to two years will also qualify for 15 hours of childcare support. 

This support will increase to 30 hours for eligible families with children aged between nine months to two years in 2025. 

You can apply online by setting up a childcare account at GOV.UKOpens in a new window

Some councils list providers who offer the additional hours on their website, or you can contact your childcare provider to see if they offer them. You can find Ofsted registered childcare providers at GOV.UKOpens in a new window

Some two-year-olds are entitled to 15 hours of free childcare or early education for 38 weeks. Your child might qualify if they have a disability or you claim certain benefits. Find out if you qualify at GOV.UK Opens in a new window

You can apply to your local council for these hours. Visit GOV.UK to find your local council’s application pageOpens in a new window

Three and four-year-olds are entitled to 15 hours each week for 38 weeks of free early education or childcare every year.

Some three to four-year-olds are entitled to an extra 15 hours, bringing their total to 30 hours for 38 weeks a year. To qualify for the extra 15 hours of free childcare:

• both parents must be working, or the sole parent must be working in a single parent family. And must permanently live in England 
• earn at least £152 a week on average each. This is equivalent to 16 hours at the National Minimum Wage or National Living Wage
• earn less than £100,000 a year.

If you don’t use all your hours in one week, you can’t use them in another week. Many providers average out the hours over the year, so you’d have the equivalent of 22 hours a week. Ask your provider how they do this.

You can apply using your local Family Information Service. Find out more at FamilyPointOpens in a new window

Some councils list approved childcare providers – check whether providers are approved at Care Inspectorate WalesOpens in a new window

Some two and three-year-olds who live in a Flying Start area can get free part-time childcare for two-and-a-half hours a day, five days a week for 39 weeks. Find your local Flying Start service at FamilyPointOpens in a new window

Three and four-year-olds can get 10 hours of free early education a week for 48 weeks a year, in a school or funded nursery. This is known as the Foundation Phase.

Some three and four-year-olds are entitled to an extra 20 hours, bringing their total to 30 hours for 48 weeks of the year.

To qualify for the extra 20 hours of free childcare:

• both parents must be working – or the sole parent must be working in a single parent family. And must permanently live in Wales
• each parent must earn on average at least the equivalent of 16 hours a week at the National Minimum Wage or National Living Wage
• each parent must earn less than £100,000 a year.

If you don’t use all your hours in one week, you can’t use them in another week. Many providers average out the hours over the year, so you’d have the equivalent of 22 hours a week. Ask your provider how they do this.

You can apply and find out more about free childcare and education in Scotland at mygov.scotOpens in a new window

Some two-year-olds can get 16 hours of childcare a week during term time if they receive certain benefits.

All three and four-year-olds qualify for 16 hours a week of free early learning and childcare during term time.

Children are entitled to at least 12.5 hours of free preschool education a week for 38 weeks in the year before they start Primary One.

Universal Credit is a benefit for people in, and out of, work. It replaces six existing benefits, including Working Tax Credit.

Working families who qualify for Universal Credit can claim back up to 85% of their monthly childcare costs.

You must pay for the childcare upfront first and provide receipts to get money back. You can only claim for childcare that has taken place during your assessment period.

However, this process is set to change, as it has been confirmed that childcare costs will be paid upfront for those going back to work or increasing your hours, starting this summer for parents in England, Wales and Scotland. This page will be updated when a date has been confirmed.

Usually you and/or your partner will need to:

• be working (it doesn’t matter how many hours you or your partner work), or
• have a job offer.

The most you can get back at present is £646.35 a month for one child, and £1,108.04 a month for two or more children. From 29 June 2023 the maximum amount parents can claim will go up to £951 for one child, and to £1,630 for two - an increase of just under 50%.

You can only claim if your childcare is provided by a government registered or approved childcare provider, for more details, visit GOV.UKOpens in a new window

Childcare costs are paid in arrears. This means you’ll usually pay the costs yourself, report the costs through your online account and be paid back on your next Universal Credit payment.

You have until the end of the second assessment period after the childcare took place to report these costs.

For example, if your assessment date (the date you started claiming and get your Universal Credit payment) is the 10^th and you want to claim back childcare costs you paid in September, you have until 10 November to report the costs.

You can only claim back childcare costs that have taken place during that assessment period. So if you pay childcare costs more than a month in advance, for example a whole term, you’ll send in your report in the same way and be paid back in instalments over a maximum of three assessment periods.

If you think you’ll struggle to pay childcare costs up front, talk to your work coach.

If you live in Northern Ireland and you’re eligible for the childcare element of Universal Credit and other income-based benefits, you can apply for a non-repayable grant of up to £1,500 from the Adviser Discretion Fund (ADF) through a Work Coach at your local Jobs and Benefits centre. 

This will be paid in advance to a registered childcare provider. Any amount awarded for childcare costs will be included within the maximum £1,500 limit payable for ADF awards in a 12-month period. 

Working Tax Credit is one of the benefits being replaced by Universal Credit.

If you’re already getting Working Tax Credit, you can continue to claim it until your circumstances change, or you’re asked to apply for Universal Credit.

You can’t make a new claim for Working Tax Credit.

You can do a quick check to see if it’s worth moving to or claiming Universal Credit using our Benefits Calculator.  But if you’re already getting benefits (particularly tax credits) you should speak to a benefits expert who will be able to help you work out what’s best for you before you make a claim because you can’t go back to your old benefits once you’ve made a claim for Universal Credit.   

Advice LocalOpens in a new window is a good place to start to find a benefits expert in your area.

The ‘childcare element’ is one of the elements, or components, that make up Working Tax Credit.

If you qualify, it could cover up to 70% of your childcare costs.

You can apply for the childcare element of Working Tax Credit if you:

• Work at least 16 hours a week (if you’re a couple, you both need to work at least 16 hours a week).
• Pay for registered or approved childcare. Find out more about childcare costs at GOV.UKOpens in a new window

With the childcare element, you can get help with up to 70% of your childcare costs.

The table below shows how much you could get in the 2022/23 tax year:

If you pay more than this for childcare, you’ll still only get the maximum amounts listed above.

If you qualify for the childcare element, you won’t necessarily get the full amounts.

How much you get will depend on:

• your income
• the hours you work
• your childcare costs.

The government’s childcare voucher scheme is being replaced by the Tax-Free Childcare scheme mentioned above.

The childcare voucher scheme closed to new members in October 2018.

If you’re already getting childcare vouchers, you can keep getting them as long as your employer continues to offer them.

Instead of offering childcare vouchers, your employer might choose to make a direct payment to a childcare provider.

This payment will be deducted from your pre-tax salary in the same way as a childcare voucher. You get the same tax-free amounts as you would if you were getting childcare vouchers.

Since October 2018, you’re not able to start getting childcare vouchers or directly contracted childcare.

If you’re already getting this support, you can continue to get it for as long as your current employer continues to offer it.

Some employers set up their own nursery, either at your place of work or at another location.

Your employer decides how much you pay for access to a workplace nursery.

But whether it’s free or subsidised, it counts as a tax-free perk of your job.

Find out from your employer if they offer a workplace nursery.

Are you a grandparent or other relative who is caring for children while their parents are at work? Then National Insurance credits are available to help you keep on building up your entitlement to State Pension during this time.

You’ll need 35 qualifying years to get the new full State Pension.

Check your National Insurance record at GOV.UKOpens in a new window

These National Insurance credits are called Specified Adult Childcare credits and you need to apply for them.