How It Works
Tax-Free Childcare is a government scheme where for every £8 you pay in, the government adds £2 (up to £2,000 per child per year, or £4,000 for disabled children).
Example: If you pay £8,000 in childcare costs, the government contributes £2,000, giving you £10,000 total.
Eligibility
- • Both parents must be working (or one working if single parent)
- • Each parent must earn at least £152/week but less than £100,000/year
- • Child must be under 12 (or under 17 if disabled)
- • You cannot claim Tax-Free Childcare and Tax Credits at the same time
Extended free hours (9 months to 4 years)
For many working families in England, support now combines funded childcare hours (age and term dependent) plus Tax-Free Childcare top-ups. In practice, the cash value varies by nursery and local delivery model.
- Funded hours usually start from the term after your child becomes eligible.
- Many providers stretch term-time hours across more weeks with fewer hours per week.
- Provider extras (food, nappies, trips, session rules) can change final out-of-pocket cost.
Official rules and updates: GOV.UK childcare support
High earners (£100k+) and planning
Eligibility for Tax-Free Childcare is tested per parent, not by combined household income. If either parent is over £100,000 adjusted net income, access is lost.
If you are near the threshold, model your outcome before making decisions:
- Compare childcare schemes with our calculator
- Use salary sacrifice to reduce adjusted net income
- Check if HICBC also affects your family
Community discussion: UKPF thread on childcare subsidy value and £100k+ edge cases
High-earner scenarios
These examples show how small income changes around £100,000 can create large swings in childcare support. All figures use 2026/27 thresholds and assume one child under 12.
Scenario A — £105k salary, no sacrifice
Adjusted net income exceeds £100k. Tax-Free Childcare eligibility lost. Also triggers Personal Allowance taper (60% effective tax on £100k–£105k).
Scenario B — £105k salary, £6k pension sacrifice
ANI drops to £99k. Restores Tax-Free Childcare (up to £2,000/year per child), restores full Personal Allowance. Net cost of £6k sacrifice: roughly £2,400 after tax/NI saved plus childcare gained.
Scenario C — £115k salary, both parents working
Even if one parent earns £50k, the £115k parent disqualifies the household from Tax-Free Childcare unless they sacrifice £15k+ into pension. Worth modelling but may not be practical for everyone.
These are illustrative. Use our childcare comparison calculator with your own numbers. Rules sourced from GOV.UK.
Apply
Apply on GOV.UK →Compare with Legacy Vouchers
Some families still need to compare legacy employer childcare vouchers with Tax-Free Childcare before switching.
Compare Childcare Schemes →