Tax-free childcare is a Government scheme to help eligible working families save on their childcare costs. Eligible working parents and carers can open online childcare accounts - just like an online bank account - to pay registered childcare providers directly.
For every £8 paid into an account, the Government will add £2 (£4 for a disabled child), and the total amount in the account can only be spent on childcare. The maximum that can be paid into an account each year is £8,000 and the maximum that will be received from the Government is £2,000 (£4,000 for disabled children.)
Parents can open an individual account for each child they pay childcare for. For example, if you have three children, you can open three tax-free childcare accounts and deposit up to £8,000 into each.
Only a parent or carer can set up a tax-free childcare account, however money can be deposited into the account by parents, friends, family and employers.
You can apply for tax-free childcare if:
You can still apply for tax free childcare if you are:
You may still be able to get tax-free childcare, if you or your partner doesn't work, and the non-working partner gets:
You can't apply for Tax-Free Childcare for a child who is:
If you're adopting a child, you can apply for tax-free childcare when a court has made an adoption order.
Applications can be made on the HMRC Childcare Service website.
You will need the following to apply:
For each child applied for, you should have claimed Child Benefit for them - either now or in the past.
In most cases, you will be told instantly if your application is successful. If it’s unsuccessful, you will be told why you're not eligible.
If you have a successful application, you will need to reconfirm you're still eligible for tax-free childcare using your Childcare Service account 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.
You can transfer money into a tax-free childcare account from any bank account. The Government top up will be added into the tax-free childcare account on the same day, and the total amount will be available to pay for childcare.
You will need to set up your childcare provider as a payee. You can then arrange regular payments to go to the provider (like a standing order) or one-off payments (like a bank transfer). The payment should only take two to three working days to arrive in the provider’s bank account.
Providers should have already received a letter with a User ID, inviting them to sign up online at the Childcare Service website.
If a provider hasn’t received this letter, they’ll need to be sent a new one. They should contact the HMRC helpline on 0300 123 4097.
The provider will need to provide the following information to sign up: